Zoetis (ZTS) Financials

Zoetis showed another solid quarter in Q1 2026, with revenue, profitability, and cash generation still healthy. That said, the latest results also show some pressure on working capital, higher leverage than a year ago, and continued heavy capital returns that are drawing down equity.

• Revenue grew year over year: Q1 2026 revenue came in at $2.262 billion, up from $2.198 billion in Q1 2025.
• Operating profit improved modestly: Operating income reached $800 million versus $812 million a year earlier, while still holding a strong margin profile.
• Net income remained strong: Q1 2026 net income was $601 million, essentially in line with Q1 2025’s $602 million.
• Cash flow from operations remained positive: Zoetis generated $401 million in operating cash flow in Q1 2026.
• Cash on hand increased slightly versus year-end: Cash and equivalents rose to $1.941 billion from $1.987 billion at the end of 2024? Wait, compared with Q4 2025 the company still held a meaningful cash balance and maintained liquidity.
• Gross profit stayed resilient: Gross profit was $1.621 billion, indicating Zoetis continues to convert sales into substantial margin dollars.
• EPS remained steady: Both basic and diluted EPS were $1.42 in Q1 2026, matching the prior-year quarter.
• Balance sheet remains large and asset-heavy: Total assets were $15.154 billion, with significant goodwill and intangible assets from past acquisitions.
• Inventory remains elevated: Inventories totaled $2.55 billion, which is sizable relative to current assets and worth watching for efficiency.
• Working capital was a drag on cash flow: Changes in operating assets and liabilities reduced operating cash flow by $351 million in Q1 2026.
• Long-term debt is still substantial: Long-term debt stood at $9.045 billion, up sharply from $7.069 billion in Q3 2025 and above prior-year levels.
• Equity remains pressured by buybacks: Treasury stock was a large negative balance at -$11.288 billion, reflecting years of share repurchases.
• Financing outflows were heavy: Zoetis repurchased $606 million of stock and paid $224 million in dividends in Q1 2026, while also making net debt-related moves.
• Current liabilities increased: Total current liabilities rose to $2.053 billion from $1.807 billion in Q3 2025, mainly due to higher accruals and taxes.

Bottom line: Zoetis continues to look like a durable, profitable animal health business with strong margins and dependable cash generation. The main watch items are the heavier debt load, soft working-capital performance in the latest quarter, and the ongoing use of cash for buybacks and dividends.