Zoetis Inc. (ZTS) Intrinsic Value & DCF Valuation
Drug Manufacturers - General · NYSE
Current Price
$79.57
Intrinsic Value
$99.56
+20.1% margin of safety
What Is Zoetis Inc.'s Intrinsic Value?
As of 2026-06-12, our base-case DCF model estimates the intrinsic value of Zoetis Inc. (ZTS) at $99.56 per share, compared with a market price of $79.57, a margin of safety of +20.1%. The base case assumes 8.2% annual free cash flow growth and a 10.0% discount rate.
Across the sensitivity grid the estimate spans $78.7 to $123.6. Intrinsic value is an estimate built on assumptions, not a fact. A higher discount rate or slower growth pushes the estimate down, while stronger cash flow growth lifts it.
How our DCF works · Recalculate with your own assumptions · What is intrinsic value?
Is Zoetis Inc. (ZTS) Undervalued?
At $79.57, ZTS trades about 20.1% below our base-case intrinsic value estimate. That is a real discount, but it stays short of the 30% margin of safety we require before calling a stock undervalued.
COMPETITIVE MOAT
↑Dominant Global Animal Health Leader
Zoetis holds a leading position in the global animal health market, benefiting from strong brand recognition and a comprehensive product portfolio across various animal species. This scale provides significant competitive advantages.
↑Extensive R&D and Innovation Pipeline
The company invests heavily in research and development, leading to a robust pipeline of innovative products. This focus on new treatments and solutions helps maintain its market edge and address evolving veterinary needs.
↑Strong Veterinary Relationships
Zoetis has cultivated deep relationships with veterinarians worldwide. This trust and loyalty are crucial for product adoption and provide valuable insights into market demands and trends.
INVESTMENT RISKS
↓Regulatory Scrutiny and Approval Delays
The animal health industry is subject to stringent regulatory oversight. Delays or failures in obtaining product approvals can impact revenue and market entry for new innovations.
↓Competition from Generics and Smaller Players
While Zoetis is a leader, it faces competition from generic manufacturers and specialized animal health companies. Price pressures and market share erosion are potential threats.
↓Litigation and Legal Challenges
Recent news highlights ongoing class action lawsuits related to securities fraud. Such litigation can lead to significant legal costs, reputational damage, and financial penalties.
Base case
ZTS base case valuation
Intrinsic Value
$99.56
Margin of safety
+20.1%
Expected annual return
+4.6%
Base case assumptions: 8.2% annual growth, 10.0% discount rate, 16x exit multiple, 5 year projection. Data as of 2026-06-12.
This base case uses default assumptions and is not financial advice. The intrinsic value changes significantly when the growth rate or discount rate changes. Open the calculator to set your own assumptions and see the full sensitivity range.
Customize the ZTS valuation
Adjust the growth rate, discount rate, and exit multiple to see how the intrinsic value and margin of safety for Zoetis Inc. respond.
Open DCF Calculator for ZTSCompany Overview
Zoetis Inc. stands as a global leader in animal health, focusing on the research, development, manufacturing, and commercialization of veterinary pharmaceuticals, vaccines, and diagnostic tools. Its comprehensive portfolio serves a broad spectrum of species, encompassing both livestock, including cattle, swine, poultry, fish, and sheep, and beloved companion animals such as dogs, cats, and horses. Among its pharmaceutical offerings are various therapeutic agents. This includes vaccines, vital for preventing respiratory, gastrointestinal, and reproductive diseases by stimulating a targeted immune response; anti-infectives that combat or inhibit the proliferation of bacterial, fungal, or protozoal pathogens; and parasiticides aimed at eradicating both internal and external pests such as fleas, ticks, and various worms. Additional pharmaceuticals address areas such as pain management and sedation, anti-emesis, reproductive health, and oncology. The portfolio also features dermatological solutions for allergic skin conditions and atopic dermatitis, alongside medicated feed additives specifically designed for livestock. Beyond therapeutics, Zoetis offers an extensive array of diagnostic solutions. These include portable analysis systems for blood and urine, point-of-care testing devices, specialized instruments and reagents, rapid immunoassay kits, comprehensive reference laboratory services, and blood glucose monitoring equipment. Further extending its reach, the company provides supplementary offerings such as nutritional products, agribusiness support services, biodevices, genetic testing, and innovations in precision animal health. Zoetis distributes its diverse product portfolio to a broad customer base, including veterinary professionals, livestock producers, and retail channels. This distribution occurs directly via its sales representatives and technical specialists, as well as through partnerships with third-party veterinary distributors. Established in 1952, the company maintains its corporate headquarters in Parsippany, New Jersey.
Financial Metrics — ZTS Stock Valuation Data
Revenue/Share (TTM)
$22.53
FCF/Share (TTM)
$5.06
ROIC (TTM)
21.8%
ROE (TTM)
62.4%
P/FCF
15.6x
EV/EBITDA
10.1x
FCF Yield
6.40%
Debt/Equity
2.86x
Based on trailing twelve-month data, ZTS shows a free cash flow per share of $5.06 and a ROIC of 21.8%, key inputs for stock valuation using the DCF method. The P/FCF ratio of 15.6x and FCF yield of 6.40% are important context metrics when evaluating ZTS's stock valuation relative to peers.
Frequently Asked Questions
What is the intrinsic value of ZTS?
Zoetis Inc. currently generates $5.06 in free cash flow per share. At the current price of $79.57, a DCF model would discount these cash flows at an appropriate WACC and apply a terminal growth rate to arrive at an intrinsic value. The result depends heavily on your growth and discount rate assumptions — a 1% change in WACC typically shifts the fair value estimate by 10-15%. In MiniValuator the model uses a single discount rate that you can edit directly, 10% by default, rather than a computed WACC.
Is ZTS undervalued?
ZTS trades at a P/FCF ratio of 15.6x with a free cash flow yield of 6.40%. This P/FCF is in a moderate range. However, whether ZTS is truly undervalued requires comparing the DCF intrinsic value to the current market price and evaluating whether the margin of safety is sufficient for your risk tolerance.
How do I value ZTS stock using DCF?
To perform a DCF valuation on Zoetis Inc.: (1) Start with the trailing free cash flow per share ($5.06) as the base, (2) project future FCF growth over 5-10 years based on Drug Manufacturers - General industry trends and company fundamentals, (3) apply a discount rate (WACC) reflecting ZTS's risk profile — with a debt-to-equity of 2.86x, capital structure is an important factor, and (4) add a terminal value for cash flows beyond the projection period.
What is DCF valuation and how does it apply to ZTS?
DCF (Discounted Cash Flow) estimates what a company is worth today based on its future cash generation. For Zoetis Inc., this means projecting how much free cash flow the company will produce over the next 5-10 years, shaped by Drug Manufacturers - General trends, then discounting those amounts to today's dollars. ZTS's ROIC of 21.8% indicates strong capital efficiency, which supports higher growth assumptions in the DCF model.
How does WACC affect ZTS stock valuation?
WACC (Weighted Average Cost of Capital) is the discount rate in a DCF model — it reflects the minimum return investors require. For ZTS, with a debt-to-equity ratio of 2.86x, the capital structure directly influences WACC. A 1% increase in WACC typically reduces the intrinsic value by 10-15%. At an EV/EBITDA of 10.1x, the market's implied discount rate can be reverse-engineered for comparison. In MiniValuator you set this discount rate yourself as a single editable number, 10% by default, instead of computing a formal WACC.
Learn More
- See ZTS PE Valuation → — Earnings-based stock valuation using PE ratio analysis
- DCF Methodology — Step-by-step guide to discounted cash flow analysis
- PE Methodology — Guide to PE ratio stock valuation
- WACC — Understanding the discount rate used in DCF
- Margin of Safety — How to evaluate downside protection
- Intrinsic Value — How to evaluate stock fair value
- How to Calculate Intrinsic Value — Complete guide for investors
Related Valuations
All Healthcare valuationsDCF and P/E value ZTS with different methods and assumptions, so the two conclusions can differ. Compare the P/E fair value.
Price as of 2026-06-12. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.