It's been a great afternoon session for Pfizer investors, who saw their shares rise 2.2% to a price of $26.71 per share. At these higher prices, is the company still fairly valued? If you are thinking about investing, make sure to check the company's fundamentals before making a decision.
Pfizer Has Attractive P/B and P/E Ratios:
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 30.21 and an average price to book (P/B) ratio of 4.08. In contrast, Pfizer has a trailing 12 month P/E ratio of 14.6 and a P/B ratio of 1.56.
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 -1.13. 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.
Growing Revenues With Increasing Reinvestment in the Business:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (MM) | $40,825 | $40,905 | $41,651 | $81,288 | $100,330 | $68,537 |
| Revenue Growth | n/a | 0.2% | 1.82% | 95.16% | 23.43% | -31.69% |
| 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 |
| EPS Growth | n/a | 50.8% | -42.2% | 136.2% | 42.08% | -66.73% |
| 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 |
| Current Ratio | 1.57 | 0.88 | 1.35 | 1.4 | 1.22 | 2.38 |
| Total Debt (MM) | $41,740 | $52,150 | $43,111 | $40,684 | $38,131 | $63,596 |
Pfizer has growing revenues and increasing reinvestment in the business and healthy debt levels. Additionally, the company's financial statements display decent operating margins with a positive growth rate and irregular cash flows. Furthermore, Pfizer has flat EPS growth.
