Is Zoetis, Inc. overvalued or undervalued?

As of 3 October 2025, the valuation grade for Zoetis, Inc. has moved from fair to attractive, indicating a more favorable assessment of its market position. The company appears to be undervalued, particularly when considering its P/E ratio of 31, which is higher than the industry average of 27.30, and its EV to EBITDA ratio of 21.76, which also exceeds the peer average. Additionally, Zoetis boasts a robust ROE of 55.54%, suggesting strong profitability relative to shareholder equity.
In comparison to peers, Eli Lilly & Co. has a P/E ratio of 40.89, while Johnson & Johnson stands at 26.18, highlighting that Zoetis is competitively priced despite its higher valuation ratios. Notably, the stock has underperformed against the S&P 500 over multiple periods, with a 1Y return of -23.34% compared to the index's 17.82%, reinforcing the notion that the stock may be undervalued relative to its potential.