Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Zoetis Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 4.7% to 4.5% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 55, DPO 59, DIO 314). At a 7.2% WACC with mid-year discounting, the terminal value (81% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 14.4x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $131.29 per share, suggesting ZTS is fairly valued by 11.6% at the current price of $117.69.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 3,343 | 3,505 | 3,681 | 3,830 | 4,001 | 4,101 |
| (−) Net Interest | 281 | 294 | 309 | 322 | 336 | 344 |
| (+) D&A | 614 | 660 | 691 | 699 | 730 | 748 |
| EBITDA | 4,238 | 4,459 | 4,680 | 4,851 | 5,067 | 5,193 |
| (−) Tax | 668 | 700 | 735 | 765 | 799 | — |
| (−) CapEx | 705 | 740 | 777 | 808 | 844 | — |
| (−) ΔWC | 121 | 177 | 192 | 163 | 186 | — |
| Free Cash Flow (FCF) | 2,744 | 2,842 | 2,977 | 3,115 | 3,237 | — |
| Peers' EBITDA Multiple | 14.4x | |||||
| Terminal Value | 74,836 | |||||
| WACC / Discount Rate | 7.17% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 2,651 | 2,562 | 2,504 | 2,444 | 2,370 | 52,931 |
| Enterprise Value | 65,462 | |||||
| Projection Period | 12,531 | 19.1% | ||||
| Terminal Value | 52,931 | 80.9% | ||||
| (−) Current Net Debt | 7,181 | |||||
| Equity Value | 58,281 | |||||
| (÷) Outstanding Shares | 444M | |||||
| Fair Price | $131 | +11.6% | ||||
| WACC \ EV/EBITDA Exit Multiple | 10.4x | 12.4x | 14.4x | 16.4x | 18.4x |
|---|---|---|---|---|---|
| 5.2% | $108 | $126 | $144 | $163 | $181 |
| 6.2% | $103 | $120 | $138 | $155 | $172 |
| 7.2% | $98 | $115 | $131 | $148 | $164 |
| 8.2% | $94 | $109 | $125 | $141 | $157 |
| 9.2% | $89 | $104 | $120 | $135 | $150 |
Current price: $117.69. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.