Pfizer Inc (PFE, Financial) recently experienced a daily gain of 4.13%, despite a 3-month loss of -9.96%. The company's Earnings Per Share (EPS) stand at 3.76. Is the stock undervalued? This article seeks to explore Pfizer's valuation, providing a meticulous analysis of its intrinsic value. We encourage you to read on for a comprehensive breakdown.
Introducing Pfizer Inc (PFE, Financial)
Pfizer is a global pharmaceutical giant, boasting annual sales close to $50 billion, excluding COVID-19 product sales. The company's product portfolio includes prescription drugs and vaccines, with top sellers like Prevnar 13, Ibrance, and Eliquis. Pfizer's international sales represent close to 50% of its total sales, with emerging markets contributing significantly.
At the current stock price of $33.44 and a market cap of $188.80 billion, Pfizer's stock appears significantly undervalued when compared to the GF Value of $50.22. This provides an interesting premise for a deeper exploration of the company's value.
Understanding the GF Value
The GF Value is a proprietary measure that provides an estimation of a stock's intrinsic value. The GF Value Line on our summary page offers an overview of the fair trading value of the stock. This value is calculated based on historical trading multiples, a GuruFocus adjustment factor, and future business performance estimates.
According to the GuruFocus Value calculation, Pfizer (PFE, Financial) appears significantly undervalued. This suggests that the long-term return of its stock is likely to be much higher than its business growth.
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Assessing Pfizer's Financial Strength
Investing in companies with poor financial strength can pose a higher risk of permanent loss. Therefore, it is crucial to understand a company's financial strength before buying its stock. Pfizer's cash-to-debt ratio is 0.69, which is worse than 55.47% of 1042 companies in the Drug Manufacturers industry. Despite this, Pfizer's overall financial strength is 6 out of 10, indicating fair financial health.
Profitability and Growth
Companies with consistent profitability over the long term typically offer less risk for investors. Pfizer has been profitable 10 over the past 10 years, boasting a revenue of $77.90 billion and Earnings Per Share (EPS) of $3.76 over the past twelve months. Its operating margin is 30.09%, which ranks better than 94.77% of 1033 companies in the Drug Manufacturers industry. Overall, Pfizer's profitability is ranked 9 out of 10, indicating strong profitability.
Growth is a crucial factor in the valuation of a company. Pfizer's 3-year average annual revenue growth rate is 34.4%, which ranks better than 90.63% of 918 companies in the Drug Manufacturers industry. The 3-year average EBITDA growth rate is 29.6%, which ranks better than 76.87% of 882 companies in the Drug Manufacturers industry.
ROIC vs WACC
A comparison of a company's return on invested capital (ROIC) and the weighted cost of capital (WACC) can provide insights into its profitability. Pfizer's ROIC stands at 13.17, and its WACC is 7.23, indicating that the company generates a higher return on its invested capital than the cost of capital.
Conclusion
In summary, Pfizer's stock appears to be significantly undervalued. The company's financial condition is fair, its profitability is strong, and its growth ranks better than 76.87% of 882 companies in the Drug Manufacturers industry. For more details about Pfizer's financials, you can check out its 30-Year Financials here.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
