DCF Studio

    ZTS · NYQ · Healthcare

    Zoetis Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 98.20

    Market price

    USD 83.18

    Implied upside

    +18.1%

    10-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · Price 2026-11-02 · Accounts to 2025-12-31

    AdjustedCapital expenditure runs at 7.4% of revenue against depreciation of 5.5%. A perpetuity has to be a steady state, so the forecast tapers capex to maintenance at depreciation plus the reinvestment terminal growth requires (g/ROIC of NOPAT), and the terminal year carries on from there. The bridge is shown under Terminal Value.

    Value Per Share

    Perpetuity growth
    USD 98.20+18.1%
    Exit multiple
    USD 79.79-4.1%
    Market price
    USD 83.18

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn3bnFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35CAGR
    RevenueUSD 9.3bnUSD 9.4bnUSD 9.5bnUSD 9.6bnUSD 9.7bnUSD 9.9bnUSD 10.0bnUSD 10.3bnUSD 10.5bnUSD 10.7bn+1.6%
    EBITUSD 3.4bnUSD 3.4bnUSD 3.5bnUSD 3.5bnUSD 3.6bnUSD 3.6bnUSD 3.7bnUSD 3.8bnUSD 3.8bnUSD 3.9bn+1.6%
    NOPATUSD 2.7bnUSD 2.7bnUSD 2.8bnUSD 2.8bnUSD 2.8bnUSD 2.9bnUSD 2.9bnUSD 3.0bnUSD 3.1bnUSD 3.1bn+1.6%
    Add depreciation & amortisationUSD 511.2mUSD 515.1mUSD 520.2mUSD 526.5mUSD 534.0mUSD 542.7mUSD 552.8mUSD 564.2mUSD 577.1mUSD 591.5m+1.6%
    Less capital expenditureUSD -683.9mUSD -685.1mUSD -687.7mUSD -691.8mUSD -697.3mUSD -704.4mUSD -713.0mUSD -723.3mUSD -735.1mUSD -748.8m+1.0%
    Capex, % of revenue7.4%7.3%7.3%7.2%7.2%7.1%7.1%7.1%7.0%7.0%-
    Less increase in working capitalUSD 68.5mUSD -27.4mUSD -35.4mUSD -43.5mUSD -51.9mUSD -60.6mUSD -69.8mUSD -79.3mUSD -89.4mUSD -100.1m-
    Free cashflow to firmUSD 2.6bnUSD 2.5bnUSD 2.6bnUSD 2.6bnUSD 2.6bnUSD 2.7bnUSD 2.7bnUSD 2.8bnUSD 2.8bnUSD 2.9bn+1.1%
    Discount factor0.96510.89890.83720.77980.72630.67650.63010.58690.54660.5091-
    Present valueUSD 2.5bnUSD 2.3bnUSD 2.1bnUSD 2.0bnUSD 1.9bnUSD 1.8bnUSD 1.7bnUSD 1.6bnUSD 1.5bnUSD 1.5bn-
    Present Value Of The ForecastUSD 19.0bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.89%US 10-year Treasury (^TNX), 2026-11-02
    Equity risk premium4.23%Damodaran, January 2026
    Beta0.784Reported 0.678, pulled toward 1.0 (Blume)
    Cost of equity8.21%Risk-free + beta x equity risk premium
    Cost of debt5.29%Risk-free + 40bp, the spread for a AAA rating at 16.2x interest cover. Book interest / average debt was lower, at 2.8%.
    Market capitalisationUSD 34.4bn78.8% of capital
    Total debtUSD 9.2bn21.2% of capital, book value as a proxy
    Tax rate20.4%Effective, capped at statutory
    WACC7.36%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 98.20

    62% of EV

    Forecast FCFF, final year
    USD 2.9bn
    Capex at depreciation, working capital in reinvestment
    USD 3.3bn
    Less reinvestment at g/ROIC (11.3% of NOPAT)
    USD -374.1m
    Capitalised
    USD 2.9bn
    ROIC (reported)
    22.1%
    Terminal value, undiscounted
    USD 61.9bn
    Terminal value, discounted
    USD 31.5bn
    Enterprise value
    USD 50.5bn
    Less net debt
    USD 6.9bn
    Equity value
    USD 43.6bn

    Exit at 10.1x EBITDA

    Value per shareUSD 79.79

    55% of EV

    Terminal value, undiscounted
    USD 45.9bn
    Terminal value, discounted
    USD 23.4bn
    Enterprise value
    USD 42.3bn
    Less net debt
    USD 6.9bn
    Equity value
    USD 35.4bn

    Spread between methods: 21%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    5.36%143.40156.89175.24201.56242.22
    6.36%110.88117.86126.76138.43154.32
    7.36%89.4893.3998.20104.21111.87
    8.36%74.3376.6379.3882.7386.83
    9.36%63.0564.4266.0567.9870.31

    Outlined: this model. Green text: above today's price of 83.18. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputActualModelImplied
    Revenue growth, a year5.4%1.3%-0.5%
    EBIT margin38.0%36.7%31.7%
    Discount rate-7.4%8.1%
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.