Stock Analysis on Net
Stock Analysis on Net

Zoetis Inc. (NYSE:ZTS)

This company has been moved to the archive! The financial data has not been updated since May 2, 2024.

Common-Size Income Statement

Zoetis Inc., common-size consolidated income statement

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12 months ended: Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Revenue 100.00 100.00 100.00 100.00 100.00
Cost of sales -29.97 -30.37 -29.62 -30.82 -31.82
Gross profit 70.03% 69.63% 70.38% 69.18% 68.18%
Selling, general and administrative expenses -25.18 -24.86 -25.73 -25.86 -26.17
Research and development expenses -7.19 -6.67 -6.53 -6.94 -7.30
Amortization of intangible assets -1.74 -1.86 -2.07 -2.40 -2.48
Restructuring charges and certain acquisition-related costs -0.62 -0.14 -0.55 -0.37 -0.81
Operating income 35.30% 36.10% 35.49% 33.62% 31.42%
Interest expense, net of capitalized interest -2.80 -2.74 -2.88 -3.46 -3.56
Royalty-related income 0.43 0.05 0.13 0.18 0.26
Interest income 1.23 0.62 0.08 0.18 0.59
Identifiable intangible asset impairment charges -0.41 -0.48 -0.35 -0.39 0.00
Other asset impairment charges -0.01 -0.09 -0.04 -0.06 0.00
Net gain on sale of businesses 1.18 0.00 0.00 0.00 0.00
Net gain (loss) on sale of assets 0.00 0.00 -0.04 0.28 0.32
Impairment of an equity investment 0.00 0.00 0.00 -0.06 0.00
Foreign currency loss -0.55 -0.77 -0.35 -0.31 -0.26
Other, net -0.01 0.17 -0.05 -0.07 0.00
Other income (deductions), net 1.86% -0.50% -0.62% -0.25% 0.91%
Income before provision for taxes on income 34.36% 32.87% 32.00% 29.90% 28.77%
Provision for taxes on income -6.98 -6.75 -5.84 -5.39 -4.81
Net income before allocation to noncontrolling interests 27.39% 26.13% 26.16% 24.51% 23.96%
Net loss attributable to noncontrolling interests 0.05 0.04 0.04 0.03 0.00
Net income attributable to Zoetis Inc. 27.43% 26.16% 26.20% 24.54% 23.96%

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 common-size income statement reveals a consistent expansion in profitability and operational efficiency from 2019 through 2023. The most prominent trend is the steady increase in the net income margin, which grew from 23.96% to 27.43% over the five-year period, driven primarily by improvements in gross margins and disciplined management of operating expenses.

Gross Profitability and Cost of Sales
Gross profit margins exhibited a positive upward trajectory, rising from 68.18% in 2019 to 70.03% in 2023. This improvement is directly linked to a reduction in the cost of sales as a percentage of revenue, which decreased from 31.82% to 29.97%. The stability of these margins suggests strong pricing power or successful cost-containment strategies within the production process.
Operating Expense Trends
Selling, general and administrative (SG&A) expenses remained relatively stable, with a slight downward trend from 26.17% in 2019 to 25.18% in 2023, indicating that the company has scaled its operations without a proportional increase in overhead. Research and development (R&D) expenses fluctuated slightly between 6.53% and 7.30%, maintaining a consistent level of investment in innovation relative to total revenue. Additionally, amortization of intangible assets showed a continuous decline from 2.48% to 1.74%, contributing further to the expansion of operating margins.
Operating and Pre-Tax Income
Operating income as a percentage of revenue increased significantly, growing from 31.42% in 2019 to a peak of 36.10% in 2022, before settling at 35.30% in 2023. This growth highlights a strong improvement in core operational efficiency. Income before taxes followed a similar trajectory, increasing from 28.77% to 34.36%. The growth in pre-tax income was supported not only by operating gains but also by a reduction in net interest expenses, which declined from 3.56% to 2.80% over the period.
Non-Operating Items and Net Income
Other income and expenses showed higher volatility, with 2023 marked by a notable net gain on the sale of businesses (1.18%) and an increase in interest income (1.23%). Despite an increase in the provision for taxes as a percentage of revenue—rising from 4.81% in 2019 to 6.98% in 2023—the overall growth in operating and non-operating income outweighed the higher tax burden. Consequently, the net income attributable to the company improved consistently, reflecting a robust increase in the bottom-line conversion rate of revenue.

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