A month has gone by since the last earnings report for Zoetis (ZTS Quick QuoteZTS - Free Report) . Shares have lost about 1.6% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Zoetis due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Zoetis' Q4 Earnings and Revenues Surpass Estimates

Zoetis posted fourth-quarter 2021 adjusted earnings of $1 per share (excluding one-time items), which beat the Zacks Consensus Estimate of 96 cents. In the year-ago quarter, the company reported earnings of 91 cents.

Total revenues grew 9% year over year to $2.00 billion, which beat the Zacks Consensus Estimate of $1.93 billion.

Quarterly Highlights

Zoetis derives the majority of revenues from a diversified product portfolio of medicines and vaccines used to treat and protect livestock and companion animals. The company reports business results under two geographical operating segments — the United States and International.

Revenues from the U.S. segment increased 9% year over year to $1.04 billion for the fourth quarter. Sales of companion animal products in this region grew 20% from the prior-year quarter, primarily owing to higher sales of Simparica Trio, the triple-combination parasiticide for dogs. The Apoquel and Cytopoint brands in the dermatology portfolio also led to this increase. Yet, sales of livestock products decreased 13% year over year for the quarter due to a decrease in cattle product sales as a result of generic competition and continued weakness in beef and dairy consumer markets.

Sales of swine products declined year over year due to pricing pressure on anti-infectives and vaccines. Also, sales of poultry products declined for the quarter due to the expanded use of lower-cost alternatives of premium products, in addition to generic competition.

Revenues in the International segment increased 8% year over year on a reported and operational basis to $902 million. Sales of companion animal products grew 22% on a reported and 23% on an operational basis. On a year-over-year basis, livestock product sales declined 1% on a reported basis and 2% operationally. While sales of poultry products increased owing to market expansion in key geographies including the Middle East and China, sales of swine products declined due to increased supply of pork in China, which in turn resulted in declining pork prices.

The growth resulted from increased sales of Zoetis’ parasiticides portfolio, including the Simparica and Revolution/Stronghold franchises, the key dermatology portfolio consisting of both Apoquel and Cytopoint brands as well as the recently launched monoclonal antibody products Librela and Solensia brands. Growth of the company’s fish portfolio was driven primarily by increased sales of the Alpha Flux sea lice treatment product and the Alpha JectLiVac SRS vaccine.

2022 Guidance

Zoetisexpects adjusted earnings of $5.09-$5.19 per share.

Revenues are projected between $8.325 billion and $8.475 billion.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month.

VGM Scores

At this time, Zoetis has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Zoetis has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.