Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
Profitability Ratios (Summary)
Return on Sales
Return on Investment
Zoetis Inc., profitability ratios
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
The profitability profile over the five-year period from 2019 to 2023 demonstrates a consistent expansion of margins and a strong ability to convert revenue into net income, despite some volatility in equity returns.
- Profit Margins
- Gross profit margin remained robust and relatively stable, increasing from 68.18% in 2019 to 70.03% in 2023, indicating consistent control over direct production costs. Operating profit margin showed a more pronounced upward trajectory, rising from 31.42% in 2019 to a peak of 36.10% in 2022, before settling at 35.30% in 2023. This suggests successful operational scaling and efficiency gains. Net profit margin exhibited steady growth throughout the period, climbing from 23.96% in 2019 to 27.43% in 2023, reflecting improved bottom-line performance.
- Returns on Investment
- Return on assets (ROA) followed a generally positive trend, increasing from 12.99% in 2019 to 16.41% in 2023, which points to enhanced efficiency in utilizing total assets to generate earnings. Return on equity (ROE) experienced a significant contraction between 2019 and 2020, dropping from 55.39% to 43.46%. Following this decline, ROE stabilized and fluctuated within the 44% to 48% range, ending the period at 46.91% in 2023.
Overall, the trend indicates an improvement in operational efficiency and net profitability. The divergence between the increasing ROA and the lower, though still high, ROE compared to 2019 suggests shifts in the capital structure or an increase in the equity base over the analyzed period.
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Gross Profit Margin
Zoetis Inc., gross profit margin calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Gross profit | 5,983) | 5,626) | 5,473) | 4,618) | 4,268) | |
| Revenue | 8,544) | 8,080) | 7,776) | 6,675) | 6,260) | |
| Profitability Ratio | ||||||
| Gross profit margin1 | 70.03% | 69.63% | 70.38% | 69.18% | 68.18% | |
| Benchmarks | ||||||
| Gross Profit Margin, Competitors2 | ||||||
| AbbVie Inc. | 62.42% | 70.00% | 68.96% | — | — | |
| Amgen Inc. | 68.60% | 74.17% | 73.44% | — | — | |
| Bristol-Myers Squibb Co. | 76.24% | 78.04% | 78.57% | — | — | |
| Danaher Corp. | 58.74% | 60.21% | 60.95% | — | — | |
| Eli Lilly & Co. | 79.25% | 76.77% | 74.18% | — | — | |
| Gilead Sciences Inc. | 75.87% | 79.03% | 75.56% | — | — | |
| Johnson & Johnson | 68.82% | 67.26% | 68.16% | — | — | |
| Merck & Co. Inc. | 73.17% | 70.63% | 72.02% | — | — | |
| Pfizer Inc. | 58.10% | 66.05% | 62.48% | — | — | |
| Regeneron Pharmaceuticals Inc. | 86.16% | 87.18% | 84.83% | — | — | |
| Thermo Fisher Scientific Inc. | 39.90% | 42.24% | 50.08% | — | — | |
| Vertex Pharmaceuticals Inc. | 87.21% | 87.90% | 88.06% | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Gross profit margin = 100 × Gross profit ÷ Revenue
= 100 × 5,983 ÷ 8,544 = 70.03%
2 Click competitor name to see calculations.
Between 2019 and 2023, a consistent upward trajectory is observed in both total revenue and gross profit. Revenue increased from 6,260 million US$ to 8,544 million US$, while gross profit rose from 4,268 million US$ to 5,983 million US$, indicating a steady expansion of the top line and a corresponding increase in the absolute value of gross earnings.
- Revenue and Gross Profit Growth
- The financial data demonstrates uninterrupted annual growth in both key metrics over the five-year period. The most significant absolute increase in gross profit occurred between 2020 and 2021, where the figure rose by 855 million US$, coinciding with the largest single-year revenue jump of 1,101 million US$.
- Gross Profit Margin Stability
- The gross profit margin remained highly stable, fluctuating within a narrow range of approximately 2.2 percentage points. The margin started at 68.18% in 2019 and reached a peak of 70.38% in 2021, suggesting an improvement in production efficiency or pricing power during the initial phase of the analyzed period.
- Margin Variance and Recovery
- A slight contraction in the gross profit margin was recorded in 2022, falling to 69.63% from the previous year's peak. However, this trend reversed in 2023, with the margin recovering to 70.03%. This indicates a strong ability to maintain profitability levels despite potential fluctuations in cost of goods sold or market conditions.
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Operating Profit Margin
Zoetis Inc., operating profit margin calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Operating income | 3,016) | 2,917) | 2,760) | 2,244) | 1,967) | |
| Revenue | 8,544) | 8,080) | 7,776) | 6,675) | 6,260) | |
| Profitability Ratio | ||||||
| Operating profit margin1 | 35.30% | 36.10% | 35.49% | 33.62% | 31.42% | |
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| AbbVie Inc. | 23.49% | 31.21% | 31.89% | — | — | |
| Amgen Inc. | 29.35% | 38.57% | 31.44% | — | — | |
| Bristol-Myers Squibb Co. | 16.18% | 17.96% | 15.91% | — | — | |
| Danaher Corp. | 21.77% | 27.61% | 25.35% | — | — | |
| Eli Lilly & Co. | 18.92% | 24.97% | 22.45% | — | — | |
| Gilead Sciences Inc. | 28.24% | 27.17% | 36.72% | — | — | |
| Johnson & Johnson | 24.90% | 24.63% | 24.95% | — | — | |
| Merck & Co. Inc. | 3.92% | 30.27% | 25.74% | — | — | |
| Pfizer Inc. | 2.15% | 35.37% | 24.70% | — | — | |
| Regeneron Pharmaceuticals Inc. | 30.85% | 38.93% | 55.67% | — | — | |
| Thermo Fisher Scientific Inc. | 16.00% | 18.69% | 25.57% | — | — | |
| Vertex Pharmaceuticals Inc. | 38.83% | 48.23% | 36.73% | — | — | |
| Operating Profit Margin, Sector | ||||||
| Pharmaceuticals, Biotechnology & Life Sciences | 18.01% | 28.59% | 26.98% | — | — | |
| Operating Profit Margin, Industry | ||||||
| Health Care | 12.79% | 18.74% | 18.04% | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Operating profit margin = 100 × Operating income ÷ Revenue
= 100 × 3,016 ÷ 8,544 = 35.30%
2 Click competitor name to see calculations.
Between 2019 and 2023, a consistent upward trajectory is observed in both total revenue and operating income. Revenue increased from US$ 6,260 million to US$ 8,544 million, while operating income rose from US$ 1,967 million to US$ 3,016 million. This simultaneous growth indicates a period of sustained scale expansion and strengthened profitability.
- Operating Profit Margin Expansion
- The operating profit margin experienced steady growth from 2019 through 2022, rising from 31.42% to a peak of 36.10%. This expansion suggests that operating income grew at a faster rate than revenue during this period, reflecting improved operational efficiency, effective cost management, or enhanced pricing power.
- Recent Margin Performance
- In 2023, a slight contraction in the operating profit margin is noted, with the figure decreasing to 35.30%. While both absolute revenue and operating income continued to climb, the margin compression indicates that operating expenses increased at a slightly higher rate than revenue growth during the most recent fiscal year.
- Overall Efficiency Analysis
- Over the five-year analyzed period, the organization maintained a robust profit profile, consistently keeping the operating margin above 31%. The overall trend demonstrates a strong capacity to convert sales into operating profit, although the transition between 2022 and 2023 suggests a stabilization phase following several years of margin growth.
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Net Profit Margin
Zoetis Inc., net profit margin calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to Zoetis Inc. | 2,344) | 2,114) | 2,037) | 1,638) | 1,500) | |
| Revenue | 8,544) | 8,080) | 7,776) | 6,675) | 6,260) | |
| Profitability Ratio | ||||||
| Net profit margin1 | 27.43% | 26.16% | 26.20% | 24.54% | 23.96% | |
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| AbbVie Inc. | 8.95% | 20.39% | 20.54% | — | — | |
| Amgen Inc. | 24.96% | 26.42% | 24.25% | — | — | |
| Bristol-Myers Squibb Co. | 17.83% | 13.71% | 15.08% | — | — | |
| Danaher Corp. | 19.94% | 22.91% | 21.84% | — | — | |
| Eli Lilly & Co. | 15.36% | 21.88% | 19.71% | — | — | |
| Gilead Sciences Inc. | 21.03% | 17.02% | 23.05% | — | — | |
| Johnson & Johnson | 41.28% | 18.90% | 22.26% | — | — | |
| Merck & Co. Inc. | 0.61% | 24.49% | 26.79% | — | — | |
| Pfizer Inc. | 3.56% | 31.01% | 26.76% | — | — | |
| Regeneron Pharmaceuticals Inc. | 30.14% | 35.64% | 50.25% | — | — | |
| Thermo Fisher Scientific Inc. | 13.99% | 15.47% | 19.70% | — | — | |
| Vertex Pharmaceuticals Inc. | 36.68% | 37.20% | 30.92% | — | — | |
| Net Profit Margin, Sector | ||||||
| Pharmaceuticals, Biotechnology & Life Sciences | 17.95% | 22.55% | 23.38% | — | — | |
| Net Profit Margin, Industry | ||||||
| Health Care | 11.49% | 14.65% | 15.24% | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Net profit margin = 100 × Net income attributable to Zoetis Inc. ÷ Revenue
= 100 × 2,344 ÷ 8,544 = 27.43%
2 Click competitor name to see calculations.
Between 2019 and 2023, there was a consistent upward trend in both top-line revenue and bottom-line net income. Revenue grew from 6,260 million USD to 8,544 million USD, while net income attributable to the company increased from 1,500 million USD to 2,344 million USD. The simultaneous growth of these two metrics indicates a sustained ability to scale operations while enhancing overall profitability.
- Net Profit Margin Progression
- The net profit margin exhibited a steady expansion over the five-year period, rising from 23.96% in 2019 to 27.43% in 2023. A significant increase was noted between 2020 and 2021, where the margin climbed from 24.54% to 26.20%. While a marginal contraction occurred in 2022, falling slightly to 26.16%, the margin recovered strongly in 2023 to reach its highest point in the analyzed timeframe.
- Operational Efficiency and Income Growth
- Net income growth outpaced revenue growth during this interval. Total revenue increased by approximately 36.5%, whereas net income grew by approximately 56.3%. This divergence suggests that the company successfully optimized its cost structure or benefited from favorable pricing dynamics, allowing a larger portion of each revenue dollar to be retained as profit.
- Profitability Stability
- The maintenance of a net profit margin consistently above 23% reflects a high degree of financial resilience. The ability to expand margins from 23.96% to 27.43% while simultaneously increasing the volume of revenue suggests strong operational leverage and effective management of operating expenses.
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Return on Equity (ROE)
Zoetis Inc., ROE calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to Zoetis Inc. | 2,344) | 2,114) | 2,037) | 1,638) | 1,500) | |
| Total Zoetis Inc. equity | 4,997) | 4,405) | 4,543) | 3,769) | 2,708) | |
| Profitability Ratio | ||||||
| ROE1 | 46.91% | 47.99% | 44.84% | 43.46% | 55.39% | |
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| AbbVie Inc. | 46.94% | 68.60% | 74.91% | — | — | |
| Amgen Inc. | 107.78% | 178.97% | 87.96% | — | — | |
| Bristol-Myers Squibb Co. | 27.27% | 20.37% | 19.46% | — | — | |
| Danaher Corp. | 8.91% | 14.39% | 14.24% | — | — | |
| Eli Lilly & Co. | 48.65% | 58.64% | 62.16% | — | — | |
| Gilead Sciences Inc. | 24.81% | 21.62% | 29.55% | — | — | |
| Johnson & Johnson | 51.11% | 23.36% | 28.20% | — | — | |
| Merck & Co. Inc. | 0.97% | 31.57% | 34.17% | — | — | |
| Pfizer Inc. | 2.38% | 32.79% | 28.47% | — | — | |
| Regeneron Pharmaceuticals Inc. | 15.22% | 19.14% | 43.03% | — | — | |
| Thermo Fisher Scientific Inc. | 12.83% | 15.80% | 18.94% | — | — | |
| Vertex Pharmaceuticals Inc. | 20.59% | 23.88% | 23.19% | — | — | |
| ROE, Sector | ||||||
| Pharmaceuticals, Biotechnology & Life Sciences | 20.65% | 27.99% | 29.75% | — | — | |
| ROE, Industry | ||||||
| Health Care | 19.40% | 24.82% | 25.44% | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
ROE = 100 × Net income attributable to Zoetis Inc. ÷ Total Zoetis Inc. equity
= 100 × 2,344 ÷ 4,997 = 46.91%
2 Click competitor name to see calculations.
Between 2019 and 2023, a consistent upward trajectory in absolute profitability was observed, characterized by steady growth in net income attributable to Zoetis Inc. Net income rose from US$ 1,500 million in 2019 to US$ 2,344 million by the end of 2023. This period also saw a significant expansion of the total equity base, which grew from US$ 2,708 million to US$ 4,997 million, despite a slight decrease in 2022.
- Net Income Trends
- Profitability experienced uninterrupted year-over-year growth throughout the analyzed period. The most substantial absolute increase occurred between 2020 and 2021, where net income rose by US$ 399 million, contributing to a cumulative increase of approximately 56% over the five-year span.
- Equity Base Expansion
- Total equity demonstrated a strong overall increase, nearly doubling from 2019 to 2023. The growth was most pronounced between 2019 and 2021, followed by a minor contraction in 2022 from US$ 4,543 million to US$ 4,405 million, before recovering to a peak of US$ 4,997 million in 2023.
- Return on Equity (ROE) Dynamics
- ROE exhibited a notable decline from its 2019 peak of 55.39% to 43.46% in 2020. This contraction is attributable to the equity base growing at a faster rate than net income during that specific interval. Following this adjustment, the ROE stabilized and remained resilient, fluctuating within a range of 43% to 48% between 2020 and 2023. The stability of the ROE during these later years suggests that net income growth has largely kept pace with the expansion of shareholders' equity, maintaining a high level of capital efficiency.
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Return on Assets (ROA)
Zoetis Inc., ROA calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to Zoetis Inc. | 2,344) | 2,114) | 2,037) | 1,638) | 1,500) | |
| Total assets | 14,286) | 14,925) | 13,900) | 13,609) | 11,545) | |
| Profitability Ratio | ||||||
| ROA1 | 16.41% | 14.16% | 14.65% | 12.04% | 12.99% | |
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| AbbVie Inc. | 3.61% | 8.53% | 7.88% | — | — | |
| Amgen Inc. | 6.91% | 10.06% | 9.63% | — | — | |
| Bristol-Myers Squibb Co. | 8.43% | 6.53% | 6.40% | — | — | |
| Danaher Corp. | 5.64% | 8.55% | 7.73% | — | — | |
| Eli Lilly & Co. | 8.19% | 12.62% | 11.44% | — | — | |
| Gilead Sciences Inc. | 9.12% | 7.27% | 9.16% | — | — | |
| Johnson & Johnson | 20.98% | 9.57% | 11.47% | — | — | |
| Merck & Co. Inc. | 0.34% | 13.30% | 12.35% | — | — | |
| Pfizer Inc. | 0.94% | 15.91% | 12.11% | — | — | |
| Regeneron Pharmaceuticals Inc. | 11.95% | 14.85% | 31.75% | — | — | |
| Thermo Fisher Scientific Inc. | 6.07% | 7.15% | 8.12% | — | — | |
| Vertex Pharmaceuticals Inc. | 15.92% | 18.30% | 17.44% | — | — | |
| ROA, Sector | ||||||
| Pharmaceuticals, Biotechnology & Life Sciences | 7.25% | 10.67% | 10.42% | — | — | |
| ROA, Industry | ||||||
| Health Care | 7.19% | 9.66% | 9.46% | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
ROA = 100 × Net income attributable to Zoetis Inc. ÷ Total assets
= 100 × 2,344 ÷ 14,286 = 16.41%
2 Click competitor name to see calculations.
The financial performance from 2019 to 2023 demonstrates a consistent upward trajectory in profitability, characterized by steady growth in net income and an overall improvement in asset utilization efficiency.
- Net Income Growth
- Net income attributable to Zoetis Inc. exhibited uninterrupted growth over the five-year period, increasing from 1,500 million USD in 2019 to 2,344 million USD in 2023. The most significant year-over-year expansion occurred between 2020 and 2021, where net income rose from 1,638 million USD to 2,037 million USD.
- Asset Base Evolution
- Total assets expanded from 11,545 million USD in 2019 to a peak of 14,925 million USD in 2022. A moderate contraction was observed in 2023, with total assets declining to 14,286 million USD, suggesting a potential optimization of the balance sheet or a reduction in total resource allocation.
- Return on Assets (ROA) Analysis
- The ROA experienced volatility in the early part of the period, starting at 12.99% in 2019 and dipping to 12.04% in 2020. Following this, a recovery trend began, leading to a peak of 16.41% in 2023. The marked increase in the final year is attributable to the combination of the highest recorded net income and a reduced asset base, indicating a significant improvement in the efficiency of generating profit from the company's total investments.
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