Fundamentals · ZTS
DuPont (ROE Decomposition) for ZTS
AI-generated plain-English read of dupont (roe decomposition) for ZTS. Updated daily.
Leverage-driven ROE, improving
highROE is rising (22.0%) but the engine is leverage — a 4.79× equity multiplier means a small drop in profitability gets amplified straight into the bottom line. Genuine improvement would show up in margins or asset efficiency first.
What will probably happen
- ROE is on an upward path — if the leading leg continues, the next reported period should sustain or extend the gain.
- Elevated leverage (4.79×) is amplifying ROE in both directions. If margins slip, ROE will fall faster than the income statement suggests.
What to do
- If you HOLD this stock
- Leverage (4.79×) is doing the heavy lifting. Hold only if you're comfortable that the debt load is sustainable in a slower earnings environment. Watch interest coverage and free cash flow.
- If you are EVALUATING this stock
- Don't let the headline ROE (22.0%) mislead you — it's primarily a function of 4.79× leverage. A cleaner way to compare this company is on ROIC or on ROA, which strip out the capital structure effect.
- If you trade OPTIONS
- No sharp DuPont signal either way. Premium is fairly priced for a fundamentals-stable story — wait for a clearer inflection in one of the legs before positioning directionally.
34 periods with all three DuPont legs populated — trend reads are reliable.
Technical details
Technical analysis
- ROE
- 22.0% — improving
- Sector context
- not provided
- Periods analysed
- 34
- Primary ROE driver
- Leverage Driven
- Profitability (net margin)
- 28.0% — stable, healthy
- Asset efficiency (turnover)
- 0.16× — stable, healthy
- Leverage (equity multiplier)
- 4.79× — improving, worrying [elevated]
Key levels
| Level | Value |
|---|---|
| latest em | 4.789 |
| latest roe | 0.22 |
| latest margin | 0.28 |
| latest turnover | 0.164 |
| em high threshold | 4 |
| em critical threshold | 5 |