Pfizer Investors, You Need to Know This

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.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.