It hasn't been a great afternoon session for Pfizer investors, who have watched their shares sink by -5.1% to a price of $28.91. Some of you might be wondering if it's time to buy the dip. If you are considering this, make sure to check the company's fundamentals first to determine if the shares are fairly valued at today's prices.
A Lower P/B Ratio Than Its Sector Average but Trades Above Its Graham Number:
Pfizer Inc. discovers, develops, manufactures, markets, distributes, and sells biopharmaceutical products worldwide. The company belongs to the Health Care sector, which has an average price to earnings (P/E) ratio of 24.45 and an average price to book (P/B) ratio of 4.16. In contrast, Pfizer has a trailing 12 month P/E ratio of 15.8 and a P/B ratio of 1.68.
When we divide Pfizer's P/E ratio by its expected EPS growth rate of the next five years, we obtain its PEG ratio of -1.88. Since it's negative, the company has negative growth expectations, and most investors will probably avoid the stock unless it has an exceptionally low P/E and P/B ratio.
Wider Gross Margins Than the Industry Average of 60.94%:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (MM) | $40,825 | $40,905 | $41,651 | $81,288 | $100,330 | $68,537 |
| Gross Margins | 78% | 80% | 80% | 62% | 66% | 61% |
| Operating Margins | 9% | 28% | 17% | 30% | 35% | 15% |
| Net Margins | 27% | 39% | 22% | 28% | 31% | 15% |
| Net Income (MM) | $11,188 | $16,056 | $9,195 | $22,459 | $31,407 | $10,521 |
| Net Interest Expense (MM) | $1,316 | $1,573 | $1,449 | $4,878 | $1,238 | $1,833 |
| Earnings Per Share | $1.87 | $2.82 | $1.63 | $3.85 | $5.47 | $1.8200000000000005 |
| Diluted Shares (MM) | 5,977 | 5,675 | 5,632 | 5,708 | 5,733 | 5,631 |
| Free Cash Flow (MM) | $13,843 | $10,542 | $12,177 | $30,211 | $26,031 | $18,866 |
| Capital Expenditures (MM) | $1,984 | $2,046 | $2,226 | $2,711 | $3,236 | $3,864 |
| Net Current Assets (MM) | -$45,738 | -$71,345 | -$55,689 | -$44,320 | -$50,029 | -$43,805 |
| Long Term Debt (MM) | $32,909 | $35,955 | $37,133 | $36,195 | $32,884 | $61,048 |
Pfizer has growing revenues and increasing reinvestment in the business and healthy debt levels. Additionally, the company's financial statements display wider gross margins than its peer group and decent operating margins with a positive growth rate. Furthermore, Pfizer has flat EPS growth and irregular cash flows.
