DCF Tool

ZTS

Zoetis Inc – Pharmaceutical Preparation Manufacturing
Zoetis is the leading animal health company, dedicated to supporting its customers and their businesses. Building on more than 65 years of experience in animal health, Zoetis discovers, develops, manufactures and commercializes medicines, vaccines and diagnostic products, which are complemented by biodevices, genetic tests and precision livestock farming. Zoetis serves veterinarians, livestock producers and people who raise and care for farm and companion animals with sales of its products in more than 100 countries. In 2019, the company generated annual revenue of $6.3 billion with approximately 10,600 employees.
Analysis Results
Intrinsic Value $175.22
Latest Price $148.29
Relative Value 15% undervalued
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Cash Flow (Billions)
Analysis Parameters
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Analysis Details
Growth Rate Projection

An exponential growth model was fit to the past cash flow data, giving more weight to more recent years. This model determined a growth rate estimate of 20.1%.

Weighted Average Cost of Capital (WACC)

The calculated WACC is 7.9%. This value is used as the default discount rate.

Value of Future Flows

Assuming a growth rate of 20.1%, the cash flows for the next 5 years are projected.

The present value of each year's flow is adjusted to present value using the discount rate.

Year Future flow (billion) Present value (billion)
2022 2.87 2.66
2023 3.45 2.96
2024 4.14 3.29
2025 4.97 3.67
2026 5.97 4.08
Terminal Value

Assuming a growth rate after the projection years of 2.0%, the terminal value of the company would be 103 billion. This corresponds to a present value of 65.4 billion.

Intrinsic Value Per Share

The total present value of the projected cash flows is 16.7 billion. Adding in the terminal value gives a total present value of 82.0 billion.

There are presently 468.0 million outstanding shares, so the intrinsic value per share is 175.22.

Financial Statements

The following data was to determine the past cash flows.

Current Assets 6,930,000,000
Current Cash 3,485,000,000
Current Liabilities 1,797,000,000
Current Debt 0
Non-Cash Working Capital (NCWC) 1,648,000,000
Change in NCWC 207,000,000
EBIT 2,813,000,000
Tax Provision 454,000,000
Depreciation and Amortization 448,000,000
Capital Expenditure -477,000,000
Unlevered Free Cash Flow 2,477,695,337
Current Assets 6,611,000,000
Current Cash 3,604,000,000
Current Liabilities 2,170,000,000
Current Debt 604,000,000
Non-Cash Working Capital (NCWC) 1,441,000,000
Change in NCWC -67,000,000
EBIT 2,281,000,000
Tax Provision 360,000,000
Depreciation and Amortization 441,000,000
Capital Expenditure -453,000,000
Unlevered Free Cash Flow 1,790,597,194
Current Assets 4,748,000,000
Current Cash 1,934,000,000
Current Liabilities 1,806,000,000
Current Debt 500,000,000
Non-Cash Working Capital (NCWC) 1,508,000,000
Change in NCWC 24,000,000
EBIT 2,034,000,000
Tax Provision 301,000,000
Depreciation and Amortization 412,000,000
Capital Expenditure -460,000,000
Unlevered Free Cash Flow 1,670,058,856
Current Assets 4,399,000,000
Current Cash 1,701,000,000
Current Liabilities 1,223,000,000
Current Debt 9,000,000
Non-Cash Working Capital (NCWC) 1,484,000,000
Change in NCWC -75,000,000
EBIT 1,909,000,000
Tax Provision 266,000,000
Depreciation and Amortization 308,000,000
Capital Expenditure -338,000,000
Unlevered Free Cash Flow 1,503,530,177
Current Assets 4,217,000,000
Current Cash 1,564,000,000
Current Liabilities 1,094,000,000
Current Debt 0
Non-Cash Working Capital (NCWC) 1,559,000,000
Change in NCWC 13,000,000
EBIT 1,737,000,000
Tax Provision 663,000,000
Depreciation and Amortization 242,000,000
Capital Expenditure -224,000,000
Unlevered Free Cash Flow 1,012,832,131
Current Assets 3,390,000,000
Current Cash 727,000,000
Current Liabilities 1,117,000,000
Current Debt 0
Non-Cash Working Capital (NCWC) 1,546,000,000
Change in NCWC 246,000,000
EBIT 1,427,000,000
Tax Provision 409,000,000
Depreciation and Amortization 240,000,000
Capital Expenditure -216,000,000
Unlevered Free Cash Flow 1,221,720,684
Current Assets 3,830,000,000
Current Cash 1,154,000,000
Current Liabilities 1,781,000,000
Current Debt 405,000,000
Non-Cash Working Capital (NCWC) 1,300,000,000
Change in NCWC -204,000,000
EBIT 1,094,000,000
Tax Provision 206,000,000
Depreciation and Amortization 199,000,000
Capital Expenditure -224,000,000
Unlevered Free Cash Flow 451,488,073
Current Assets 3,465,000,000
Current Cash 882,000,000
Current Liabilities 1,086,000,000
Current Debt 7,000,000
Non-Cash Working Capital (NCWC) 1,504,000,000
Change in NCWC 157,000,000
EBIT 1,001,000,000
Tax Provision 233,000,000
Depreciation and Amortization 204,000,000
Capital Expenditure -180,000,000
Unlevered Free Cash Flow 897,569,512
Current Assets 3,357,000,000
Current Cash 610,000,000
Current Liabilities 1,415,000,000
Current Debt 15,000,000
Non-Cash Working Capital (NCWC) 1,347,000,000
Change in NCWC -150,000,000
EBIT 843,000,000
Tax Provision 187,000,000
Depreciation and Amortization 209,000,000
Capital Expenditure -184,000,000
Unlevered Free Cash Flow 489,534,782

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