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Since Zoetis Inc. (NYSE:ZTS) released its earnings in March 2019, analyst forecasts seem fairly subdued, with earnings expected to grow by 3.2% in the upcoming year relative to the higher past 5-year average growth rate of 23%. By 2020, we can expect Zoetis’s bottom line to reach US$1.5b, a jump from the current trailing-twelve-month of US$1.4b. Below is a brief commentary around Zoetis's earnings outlook going forward, which may give you a sense of market sentiment for the company. For those interested in more of an analysis of the company, you can research its fundamentals here.
How will Zoetis perform in the near future?
The longer term view from the 15 analysts covering ZTS is one of positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. I've plotted out each year's earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of ZTS's earnings growth over these next few years.
This results in an annual growth rate of 12% based on the most recent earnings level of US$1.4b to the final forecast of US$2.0b by 2022. EPS reaches $4.3 in the final year of forecast compared to the current $2.96 EPS today. With a current profit margin of 25%, this movement will result in a margin of 29% by 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For Zoetis, I've put together three fundamental aspects you should look at:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is Zoetis worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Zoetis is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Zoetis? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.