Is Zoetis Inc. (ZTS) overvalued or undervalued?
Updated Nov 10, 2026 · hand-researched model · educational, not advice
At a recent price of $82.32, Zoetis Inc. (ZTS) sits below every lens we ran: our valuation lenses put the business somewhere between $83.42 and $159.75 per share. For a cyclical we value through the cycle we publish a range only (peer multiples and our researched mid-cycle DCF): where in the cycle the business sits decides where in that range it lands, and a single figure would claim we know that precisely. This is an educational model, not a price target or a recommendation.
The valuation discounts Zoetis Inc.'s projected free cash flows at a weighted-average cost of capital (WACC) of 8.4%, with a long-run terminal growth rate of 2.5%. About 76% of the enterprise value comes from the terminal value — the portion beyond the explicit forecast window — which is typical for a stable, cash-generative business and a reminder that small changes in the discount rate or terminal growth assumption swing the intrinsic value meaningfully.
Running the DCF in reverse — solving for the growth the current price already assumes — the market is implying roughly -2.8% annual revenue growth for ZTS. Our base case instead compounds to about 2.0% a year over the same forecast, so the market is pricing in slower growth than our base case. The reverse-DCF is a quick sanity check: it reframes 'is this stock cheap?' as 'do I believe the growth the price requires?' rather than arguing over a single point estimate of fair value.
Sensitivity matters more than any single number. Across a reasonable band of discount-rate assumptions, ZTS's modeled DCF value ranges from about $55.51 to $152.04 per share. If that range still sits below today's price, the market is optimistic relative to the model across the whole band; if it brackets the price, the stock is roughly fairly valued on our assumptions. Use the interactive slider to see exactly where your own cost-of-capital view lands.
How to read this page: the DCF fair value is what Zoetis Inc. would be worth if its cash flows grow as modeled and are discounted at the stated WACC. The assumptions table shows every input and its source; the reverse-DCF shows what the market believes; the sensitivity band shows how fragile the answer is. None of this is investment advice — it is a transparent, auditable framework for forming your own view of ZTS's intrinsic value. Figures update as new filings and prices come in.
The assumptions behind ZTS's DCF
| Input | Value | Source |
|---|---|---|
| Base-year revenue | $9,467,000,000 | Zoetis FY2025 10-K (accession 0001555280-26-000011, filed 2026-02-12): us-gaap:Revenues FY2025 $9,467M, +2.3% reported on FY2024's $9,256M (+6% organic operational; the gap is the 2024 sale of the medicated-feed-additive line, $293M in 2024 vs $27M in 2025). FISCAL YEAR ALIGNMENT CAVEAT: from 1 Jan 2026 Zoetis stopped consolidating its non-US subsidiaries on a one-month lag (they previously closed 30 November). The change is retrospective, but Zoetis has so far recast only H1 2025 (revenue $4,680M as reported -> $4,672M recast, -$8M); the full-year 2025 recast arrives with the FY2026 10-K. The as-reported $9,467M is used; on H1's evidence the recast difference is immaterial (<0.2%). CROSS-CHECK: H1 2026 revenue $4,730M, +1.2% on recast H1 2025 — but that half contains ~$100M of one-off revenue the company attributes to the alignment (Q1 2026 release), so the underlying first half was roughly flat to down. |
| Base EBIT margin | 37.5% | Zoetis Q4/FY2025 earnings release, 8-K Ex-99.1 filed 2026-02-12 (accession 0001555280-26-000008): Zoetis reports no operating-income line. Derived from the GAAP income statement: revenue $9,467M - cost of sales $2,666M - SG&A $2,378M - R&D $698M - amortization of intangibles $128M - restructuring/acquisition costs $51M = $3,546M = 37.46%. Ties to pretax income $3,360M + interest expense $222M - other income $36M = $3,546M. This is GAAP: amortization, restructuring and SBC are all charged. It is a PEAK figure — the best margin in Zoetis's recent history (FY2024 on the same build: $3,133M + $225M - $19M = $3,339M, 36.1%). CROSS-CHECK H1 2026 (Q2 release, same build): pretax $1,624M + interest $123M - other income $25M = $1,722M / $4,730M = 36.4%, against 38.1% for recast H1 2025 — margin is already falling. |
| Forecast revenue growth | -3% → 1% → 4% → 4% → 4% | Assumption — TickerWorth's 5-year explicit forecast |
| Risk-free rate | 5.2% | US 10Y Treasury constant maturity (FRED DGS10): 5.24% on 2026-10-01, the latest published observation; the program-wide rate shared by every researched model in this run. |
| Beta | 0.85 | Assumption — Yahoo 5Y-monthly beta (yfinance) 0.74, relevered for today's capital structure: Published 5Y-monthly beta is 0.74. Normalized UP to 0.85 for one stated reason: LEVERAGE. That regression was measured almost entirely on a company whose debt was ~7-8% of its market value (~$6.6B of debt against a $70-90B market cap). Today debt is $9,150M against ~$29.6B of equity — 31% debt-to-equity — after a $2.0B convertible issued to fund buybacks and a ~50% share-price fall. Unlevering 0.74 at the old mix (~0.70) and relevering at today's (Hamada, 20.5% tax) gives ~0.87; 0.85 is that, rounded down. This LOWERS the value: at the published 0.74 the slice is ~$91. A second, softer reason points the same way: the stock now carries a securities class action and a business model the market has stopped treating as defensive. |
| Terminal growth | 2.5% | Assumption — house default: House default 2.5% (roughly long-run nominal GDP). Animal health has historically grown faster than GDP (pet humanization, protein demand), which argues for more; Zoetis's 2026 shows that its share of that growth is contestable, which argues for less. Kept at the default. 2.0% takes ~$6/share off. Must remain < WACC of 8.40%. |
| Diluted shares | 418M | Zoetis Q2 2026 earnings release, 8-K Ex-99.1 filed 2026-08-06 (accession 0001555280-26-000038): Q2 2026 weighted-average diluted shares 417.7M (445.5M a year earlier — down 6% in a year). Period-end outstanding was lower still, 414.15M, after 6.2M shares were bought in Q2 for $558M; using the weighted figure is ~$0.70/share conservative. The $2.0B 0.25% convertible notes due 2029 (conversion price ~$148.20) are far out of the money and settle principal in cash, and capped calls cover dilution up to ~$211.72, so they add no shares here. |
| Market price | $82.32 | Delayed quote · as of 2026-11-10 05:05 UTC |
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Most undervalued stocks (per our valuation) · Undervalued Healthcare stocks · All valued stocks · Interactive ZTS valuation & downloadable modelTickerWorth is an educational DCF tool, not a licensed investment adviser. Figures are estimates derived from public filings and market data and can be wrong.