Price to FCFE (P/FCFE)
Free Cash Flow to Equity (FCFE)
Zoetis Inc., FCFE calculation
US$ in millions
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).
Analysis of cash flow trends between 2019 and 2023 reveals a divergence between core operational efficiency and the cash available to equity holders.
- Net Cash Provided by Operating Activities
- A consistent growth pattern is observed in operational cash generation, increasing from US$ 1,795 million in 2019 to a peak of US$ 2,353 million in 2023. Despite a marginal contraction in 2022 to US$ 1,912 million, the overall trend indicates a strengthening capacity to generate liquidity from primary business operations.
- Free Cash Flow to Equity (FCFE)
- FCFE exhibits substantial volatility throughout the period. Significant peaks occurred in 2020 (US$ 2,405 million) and 2022 (US$ 2,666 million), contrasted by sharp declines in 2021 (US$ 1,132 million) and a critical low in 2023 (US$ 272 million). This inconsistency suggests that the cash available to shareholders is heavily influenced by factors beyond operating performance.
- Operational and Equity Cash Flow Divergence
- A notable disconnect is evident between operating cash flows and FCFE. In 2020 and 2022, FCFE exceeded net cash provided by operating activities, implying net borrowing or other financing inflows that increased the cash available to equity holders. Conversely, 2023 represents the most significant divergence in the period; despite achieving the highest operating cash flow of US$ 2,353 million, FCFE dropped to US$ 272 million, indicating substantial capital expenditures or aggressive debt repayments.
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Price to FCFE Ratio, Current
Zoetis Inc., current P/FCFE calculation, comparison to benchmarks
| No. shares of common stock outstanding | 456,295,137 |
| Selected Financial Data (US$) | |
| Free cash flow to equity (FCFE) (in millions) | 272) |
| FCFE per share | 0.60 |
| Current share price (P) | 167.23 |
| Valuation Ratio | |
| P/FCFE | 280.54 |
| Benchmarks | |
| P/FCFE, Competitors1 | |
| AbbVie Inc. | 28.94 |
| Amgen Inc. | 100.20 |
| Bristol-Myers Squibb Co. | 16.39 |
| Danaher Corp. | 25.75 |
| Eli Lilly & Co. | 70.89 |
| Gilead Sciences Inc. | 25.72 |
| Johnson & Johnson | 22.05 |
| Merck & Co. Inc. | 14.74 |
| Pfizer Inc. | 18.87 |
| Regeneron Pharmaceuticals Inc. | 22.32 |
| Thermo Fisher Scientific Inc. | 21.93 |
| Vertex Pharmaceuticals Inc. | 41.42 |
| P/FCFE, Sector | |
| Pharmaceuticals, Biotechnology & Life Sciences | 24.36 |
| P/FCFE, Industry | |
| Health Care | 23.53 |
Based on: 10-K (reporting date: 2023-12-31).
1 Click competitor name to see calculations.
If the company P/FCFE is lower then the P/FCFE of benchmark then company is relatively undervalued.
Otherwise, if the company P/FCFE is higher then the P/FCFE of benchmark then company is relatively overvalued.
Price to FCFE Ratio, Historical
Zoetis Inc., historical P/FCFE calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 457,867,115 | 463,386,716 | 471,970,580 | 475,166,373 | 474,933,945 | |
| Selected Financial Data (US$) | ||||||
| Free cash flow to equity (FCFE) (in millions)2 | 272) | 2,666) | 1,132) | 2,405) | 1,326) | |
| FCFE per share3 | 0.59 | 5.75 | 2.40 | 5.06 | 2.79 | |
| Share price1, 4 | 183.49 | 171.90 | 197.76 | 166.32 | 144.94 | |
| Valuation Ratio | ||||||
| P/FCFE5 | 308.88 | 29.88 | 82.45 | 32.86 | 51.91 | |
| Benchmarks | ||||||
| P/FCFE, Competitors6 | ||||||
| AbbVie Inc. | 17.37 | 22.66 | 18.76 | — | — | |
| Amgen Inc. | 4.71 | 8.32 | 13.52 | — | — | |
| Bristol-Myers Squibb Co. | 7.52 | 22.85 | 16.17 | — | — | |
| Danaher Corp. | 53.08 | 32.04 | 20.75 | — | — | |
| Eli Lilly & Co. | 75.06 | 60.51 | 35.17 | — | — | |
| Gilead Sciences Inc. | 12.81 | 15.22 | 12.70 | — | — | |
| Johnson & Johnson | 24.31 | 16.73 | 23.28 | — | — | |
| Merck & Co. Inc. | 24.48 | 22.40 | 18.72 | — | — | |
| Pfizer Inc. | 3.82 | 10.56 | 8.88 | — | — | |
| Regeneron Pharmaceuticals Inc. | 28.02 | 25.12 | 10.35 | — | — | |
| Thermo Fisher Scientific Inc. | 31.16 | 27.98 | 13.44 | — | — | |
| Vertex Pharmaceuticals Inc. | 33.45 | 19.91 | 26.08 | — | — | |
| P/FCFE, Sector | ||||||
| Pharmaceuticals, Biotechnology & Life Sciences | 16.93 | 19.44 | 16.49 | — | — | |
| P/FCFE, Industry | ||||||
| Health Care | 18.20 | 18.50 | 17.94 | — | — | |
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 Data adjusted for splits and stock dividends.
3 2023 Calculation
FCFE per share = FCFE ÷ No. shares of common stock outstanding
= 272,000,000 ÷ 457,867,115 = 0.59
4 Closing price as at the filing date of Zoetis Inc. Annual Report.
5 2023 Calculation
P/FCFE = Share price ÷ FCFE per share
= 183.49 ÷ 0.59 = 308.88
6 Click competitor name to see calculations.
The valuation analysis for the five-year period ending December 31, 2023, reveals a significant divergence between share price movements and the generation of Free Cash Flow to Equity (FCFE) per share, resulting in extreme volatility in the Price to FCFE (P/FCFE) ratio.
- Share Price Performance
- The share price exhibited a general upward trajectory from 2019 to 2021, rising from 144.94 USD to a peak of 197.76 USD. Subsequent years showed a correction in 2022 to 171.90 USD, followed by a moderate recovery to 183.49 USD by the end of 2023.
- Free Cash Flow to Equity (FCFE) per Share
- FCFE per share demonstrated high inconsistency throughout the analyzed period. After increasing from 2.79 USD in 2019 to 5.06 USD in 2020, it fell to 2.40 USD in 2021, rebounded to a period high of 5.75 USD in 2022, and then experienced a severe contraction to 0.59 USD in 2023.
- P/FCFE Ratio Trends
- The P/FCFE ratio reflects the instability of the underlying cash flows. The ratio fluctuated between 29.88 and 82.45 from 2019 to 2022. However, in 2023, the ratio escalated sharply to 308.88. This spike is primarily attributable to the precipitous decline in FCFE per share rather than a corresponding surge in the market price of the shares.
Overall, the results indicate that while the market valuation of the shares has remained relatively stable, the internal capacity to generate free cash flow available to equity holders has become highly erratic, leading to a distorted valuation multiple in the final year of the period.
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