Pfizer Inc Valuation – November 2018 $PFE

Company Profile (excerpt from Reuters): Pfizer Inc. (Pfizer), incorporated on June 2, 1942, is a research-based global biopharmaceutical company. The Company is engaged in the discovery, development and manufacture of healthcare products. Its global portfolio includes medicines and vaccines, as well as consumer healthcare products. The Company manages its commercial operations through two business segments: Pfizer Innovative Health (IH) and Pfizer Essential Health (EH). IH focuses on developing and commercializing medicines and vaccines that improve patients’ lives, as well as products for consumer healthcare. IH therapeutic areas include internal medicine, vaccines, oncology, inflammation and immunology, rare diseases and consumer healthcare. EH includes legacy brands, branded generics, generic sterile injectable products, biosimilars and infusion systems. EH also includes a research and development (R&D) organization, as well as its contract manufacturing business. As of December 31, 2016, the Company sold its products in over 125 countries.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of PFE – November 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $255,432,005,310 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.43 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 99.43% Pass
6. Moderate PEmg Ratio PEmg < 20 20.07 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.67 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.43 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.68 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $2.19
MG Growth Estimate 1.87%
MG Value $26.82
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $31.78
MG Value based on 0% Growth $18.63
Market Implied Growth Rate 5.78%
Current Price $43.99
% of Intrinsic Value 164.03%

Pfizer Inc. does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $1.95 in 2014 to an estimated $2.19 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 5.78% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Pfizer Inc. revealed the company was trading above its Graham Number of $25. The company pays a dividend of $1.28 per share, for a yield of 2.9%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 20.07, which was below the industry average of 36.89, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-9.12.

Pfizer Inc. scores quite poorly in the ModernGraham grading system, with an overall grade of D+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$9.12
Graham Number $25.00
PEmg 20.07
Current Ratio 1.43
PB Ratio 3.67
Current Dividend $1.28
Dividend Yield 2.91%
Number of Consecutive Years of Dividend Growth 7

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $41,583,000,000
Total Current Liabilities $29,013,000,000
Long-Term Debt $33,652,000,000
Total Assets $167,838,000,000
Intangible Assets $100,921,000,000
Total Liabilities $96,174,000,000
Shares Outstanding (Diluted Average) 5,986,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.33
Dec2017 $3.52
Dec2016 $1.17
Dec2015 $1.11
Dec2014 $1.42
Dec2013 $3.19
Dec2012 $1.94
Dec2011 $1.27
Dec2010 $1.02
Dec2009 $1.23
Dec2008 $1.20
Dec2007 $1.17
Dec2006 $2.66
Dec2005 $1.09
Dec2004 $1.49
Dec2003 $0.54
Dec2002 $1.46
Dec2001 $1.22
Dec2000 $0.59
Dec1999 $0.78
Dec1998 $0.73

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.19
Dec2017 $2.11
Dec2016 $1.52
Dec2015 $1.73
Dec2014 $1.95
Dec2013 $2.05
Dec2012 $1.43
Dec2011 $1.18
Dec2010 $1.24
Dec2009 $1.39
Dec2008 $1.49
Dec2007 $1.55
Dec2006 $1.64
Dec2005 $1.14
Dec2004 $1.13
Dec2003 $0.94
Dec2002 $1.08

Recommended Reading:

Other ModernGraham posts about the company

Pfizer Inc Valuation – February 2018 $PFE
Pfizer Inc Valuation – March 2017 $PFE
Pfizer Inc Valuation – August 2016 $PFE
Dividend Investors Should Research These 10 Stocks – July 2016
10 Companies for Enterprising Dividend Investors – June 2016

Other ModernGraham posts about related companies

Merck & Co Inc Valuation – November 2018 $MRK
Ligand Pharmaceuticals Inc Valuation – September 2018 $LGND
Supernus Pharmaceuticals Inc Valuation – August 2018 $SUPN
Lannett Co Inc Valuation – August 2018 $LCI
Spectrum Pharmaceuticals Inc Valuation – August 2018 $SPPI
Akorn Inc Valuation – July 2018 $AKRX
Mallinckrodt PLC Valuation – July 2018 $MNK
Bristol-Myers Squibb Company Valuation – June 2018 $BMY
Biogen Inc Valuation – June 2018 $BIIB
Mylan NV Valuation – June 2018 $MYL

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Pfizer Inc Valuation – February 2018 $PFE

Company Profile (obtained from Marketwatch): Pfizer, Inc. engages in the manufacture of vaccines and injectable biologic medicines. It operates through the Pfizer Innovative Health and Pfizer Essential Health segments. The Pfizer Innovative Health segment focuses on developing and commercializing novel, value-creating medicines, and vaccines for the internal medicine, vaccines, oncology, inflammation and immunology, rare diseases, and consumer healthcare. The Pfizer Essential Health segment comprises of global brands, sterile injectable pharmaceuticals, infusion systems, biosimilars, and Pfizer CentreOne. The company was founded by Charles Pfizer Sr. and Charles Erhart in 1849 and is headquartered in New York, NY.

PFE Chart

PFE data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of PFE – February 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $216,135,289,995 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.43 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 115.63% Pass
6. Moderate PEmg Ratio PEmg < 20 15.22 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.60 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.43 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.86 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $2.38
MG Growth Estimate 3.33%
MG Value $36.11
Opinion Fairly Valued
MG Grade C-
MG Value based on 3% Growth $34.54
MG Value based on 0% Growth $20.25
Market Implied Growth Rate 3.36%
Current Price $36.26
% of Intrinsic Value 100.42%

Pfizer Inc. does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, high PB ratio. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $1.95 in 2014 to an estimated $2.38 for 2018. This level of demonstrated earnings growth supports the market’s implied estimate of 3.36% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

At the time of valuation, further research into Pfizer Inc. revealed the company was trading above its Graham Number of $0. The company pays a dividend of $1.28 per share, for a yield of 3.5%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 15.22, which was below the industry average of 28.67, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-11.77.

Pfizer Inc. receives an average overall rating in the ModernGraham grading system, scoring a C-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$11.77
Graham Number $0.00
PEmg 15.22
Current Ratio 1.43
PB Ratio 3.60
Current Dividend $1.28
Dividend Yield 3.53%
Number of Consecutive Years of Dividend Growth 7

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2017
Total Current Assets $40,291,000,000
Total Current Liabilities $28,217,000,000
Long-Term Debt $34,503,000,000
Total Assets $172,151,000,000
Intangible Assets $105,799,000,000
Total Liabilities $111,381,000,000
Shares Outstanding (Diluted Average) 6,041,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.90
Dec2017 $3.52
Dec2016 $1.17
Dec2015 $1.11
Dec2014 $1.42
Dec2013 $3.19
Dec2012 $1.94
Dec2011 $1.27
Dec2010 $1.02
Dec2009 $1.23
Dec2008 $1.20
Dec2007 $1.17
Dec2006 $2.66
Dec2005 $1.09
Dec2004 $1.49
Dec2003 $0.54
Dec2002 $1.46
Dec2001 $1.22
Dec2000 $0.59
Dec1999 $0.78
Dec1998 $0.73

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.38
Dec2017 $2.11
Dec2016 $1.52
Dec2015 $1.73
Dec2014 $1.95
Dec2013 $2.05
Dec2012 $1.43
Dec2011 $1.18
Dec2010 $1.24
Dec2009 $1.39
Dec2008 $1.49
Dec2007 $1.55
Dec2006 $1.64
Dec2005 $1.14
Dec2004 $1.13
Dec2003 $0.94
Dec2002 $1.08

Recommended Reading:

Other ModernGraham posts about the company

Pfizer Inc Valuation – March 2017 $PFE
Pfizer Inc Valuation – August 2016 $PFE
Dividend Investors Should Research These 10 Stocks – July 2016
10 Companies for Enterprising Dividend Investors – June 2016
10 Companies Benjamin Graham Would Invest In Today – June 2016

Other ModernGraham posts about related companies

Bristol-Myers Squibb Co Valuation – September 2017 $BMY
Momenta Pharmaceuticals Inc Valuation – Initial Coverage $MNTA
Depomed Inc Valuation – Initial Coverage $DEPO
Endo International PLC Valuation – July 2017 $ENDP
Biogen Inc Valuation – July 2017 $BIIB
Mylan NV Valuation – March 2017 $MYL
Amgen Inc Valuation – March 2017 $AMGN
Celgene Corporation Valuation – March 2017 $CELG
Ligand Pharmaceuticals Inc Valuation – Initial Coverage $LGND
Pfizer Inc Valuation – March 2017 $PFE

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Pfizer Inc Valuation – March 2017 $PFE

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Stocks for Using A Benjamin Graham Value Investing Strategy – February 2017.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Pfizer Inc (PFE) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Pfizer Inc. (Pfizer) is a research-based global biopharmaceutical company. The Company is engaged in discovering, developing and manufacturing of healthcare products. The Company’s segments include Pfizer Innovative Health (IH) and Pfizer Essential Health (EH). Its biopharmaceutical products include Lipitor, Sutent and the Premarin family of products. Its biotechnology products include BeneFIX, ReFacto and Xyntha. The Company’s contract manufacturing business, Pfizer CentreOne, consists of its contract manufacturing and active pharmaceutical ingredient sales operation, including manufacturing and supply agreements with Zoetis Inc., and Hospira’s One-2-One sterile injectables contract manufacturing operation. Its research focuses on six areas, which include immunology and inflammation, cardiovascular and metabolic diseases, oncology, vaccines, neuroscience and pain, and rare diseases. The Company’s subsidiaries include Hospira, Inc. and Medivation, Inc.

PFE Chart

PFE data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of PFE – March 2017

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $201,828,009,978 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.25 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 37.10% Pass
6. Moderate PEmg Ratio PEmg < 20 19.39 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.52 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.25 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 4.01 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

Stage 2: Determination of Intrinsic Value

EPSmg $1.75
MG Growth Estimate -2.19%
MG Value $7.21
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $25.41
MG Value based on 0% Growth $14.90
Market Implied Growth Rate 5.45%
Current Price $33.99
% of Intrinsic Value 471.23%

Pfizer Inc. does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, high PB ratio. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of earnings growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $2.05 in 2013 to an estimated $1.75 for 2017. This level of demonstrated earnings growth does not support the market’s implied estimate of 5.45% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Pfizer Inc. revealed the company was trading above its Graham Number of $23.25. The company pays a dividend of $1.2 per share, for a yield of 3.5%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 19.39, which was below the industry average of 28.95, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-11.87.

Pfizer Inc. scores quite poorly in the ModernGraham grading system, with an overall grade of D+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$11.87
Graham Number $23.25
PEmg 19.39
Current Ratio 1.25
PB Ratio 3.52
Current Dividend $1.20
Dividend Yield 3.53%
Number of Consecutive Years of Dividend Growth 7


Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2016
Total Current Assets $38,949,000,000
Total Current Liabilities $31,115,000,000
Long-Term Debt $31,398,000,000
Total Assets $171,615,000,000
Intangible Assets $107,097,000,000
Total Liabilities $112,071,000,000
Shares Outstanding (Diluted Average) 6,159,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.45
Dec2016 $1.17
Dec2015 $1.11
Dec2014 $1.42
Dec2013 $3.19
Dec2012 $1.94
Dec2011 $1.27
Dec2010 $1.02
Dec2009 $1.23
Dec2008 $1.20
Dec2007 $1.17
Dec2006 $2.66
Dec2005 $1.09
Dec2004 $1.49
Dec2003 $0.54
Dec2002 $1.46
Dec2001 $1.22
Dec2000 $0.59
Dec1999 $0.78
Dec1998 $0.73
Dec1997 $0.56

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.75
Dec2016 $1.52
Dec2015 $1.73
Dec2014 $1.95
Dec2013 $2.05
Dec2012 $1.43
Dec2011 $1.18
Dec2010 $1.24
Dec2009 $1.39
Dec2008 $1.49
Dec2007 $1.55
Dec2006 $1.64
Dec2005 $1.14
Dec2004 $1.13
Dec2003 $0.94
Dec2002 $1.08
Dec2001 $0.85

Recommended Reading:

Other ModernGraham posts about the company

Pfizer Inc Valuation – August 2016 $PFE
Dividend Investors Should Research These 10 Stocks – July 2016
10 Companies for Enterprising Dividend Investors – June 2016
10 Companies Benjamin Graham Would Invest In Today – June 2016
15 Best Stocks For Value Investors This Week – 2/13/16

Other ModernGraham posts about related companies

Supernus Pharmaceuticals Inc Valuation – Initial Coverage $SUPN
Lannett Company Inc Valuation – Initial Coverage $LCI
Spectrum Pharmaceuticals Inc Valuation – Initial Coverage $SPPI
Abbott Laboratories Valuation – January 2017 $ABT
Johnson & Johnson Valuation – January 2017 $JNJ
Allergan plc Valuation – January 2017 $AGN
Impax Laboratories Inc – Initial Coverage $IPXL
Alexion Pharmaceuticals Inc Valuation – December 2016 $ALXN
Akorn Inc Valuation – December 2016 $AKRX
SciClone Pharmaceuticals Inc Valuation – Initial Coverage $SCLN

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Pfizer Inc Valuation – August 2016 $PFE

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Companies Benjamin Graham Would Invest In Today – July 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Pfizer Inc (PFE) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Pfizer Inc. is a research-based global biopharmaceutical company. The Company is engaged in discovering, developing and manufacturing of healthcare products. Its portfolio includes medicines, vaccines and medical devices, as well as consumer healthcare products. Its products include Prevnar/Prevenar 13, Lyrica, Enbrel, Lipitor, Viagra, Sutent, BeneFIX, Genotropin, ReFacto, Xyntha and Enbrel. Its commercial operations consist of two businesses: Innovative Products business and Established Products business. The Innovative Products business consists of two segments: the Global Innovative Pharmaceutical segment (GIP) and the Global Vaccines, Oncology and Consumer Healthcare segment (VOC). The Established Products business consists of the Global Established Pharmaceutical segment (GEP). Its research focuses on six areas, which include immunology and inflammation, cardiovascular and metabolic diseases, oncology, vaccines, neuroscience and pain, and rare diseases.

chart (56)

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of PFE – August 2016

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $211,808,348,310 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.37 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 22.78% Fail
6. Moderate PEmg Ratio PEmg < 20 19.71 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.40 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.37 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.59 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

PFE value chart August 2016

EPSmg $1.76
MG Growth Estimate 3.47%
MG Value $27.24
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $25.59
MG Value based on 0% Growth $15.00
Market Implied Growth Rate 5.61%
Current Price $34.79
% of Intrinsic Value 127.73%

Pfizer Inc. does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings growth over the last ten years, and the high PB ratio. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $1.43 in 2012 to an estimated $1.76 for 2016. This level of demonstrated earnings growth does not support the market’s implied estimate of 5.61% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Pfizer Inc. revealed the company was trading above its Graham Number of $20.98. The company pays a dividend of $1.16 per share, for a yield of 3.3%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 19.71, which was below the industry average of 38.69, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-10.44.

Pfizer Inc. scores quite poorly in the ModernGraham grading system, with an overall grade of D+.

Stage 3: Information for Further Research

PFE charts August 2016

Net Current Asset Value (NCAV) -$10.44
Graham Number $20.98
PEmg 19.71
Current Ratio 1.37
PB Ratio 3.40
Current Dividend $1.16
Dividend Yield 3.33%
Number of Consecutive Years of Dividend Growth 6

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 6/1/2016
Total Current Assets $43,845,000,000
Total Current Liabilities $32,099,000,000
Long-Term Debt $30,457,000,000
Total Assets $170,658,000,000
Intangible Assets $93,656,000,000
Total Liabilities $107,889,000,000
Shares Outstanding (Diluted Average) 6,137,000,000

Earnings Per Share History

Next Fiscal Year Estimate $1.89
Dec2015 $1.11
Dec2014 $1.42
Dec2013 $3.19
Dec2012 $1.94
Dec2011 $1.27
Dec2010 $1.02
Dec2009 $1.23
Dec2008 $1.20
Dec2007 $1.17
Dec2006 $2.66
Dec2005 $1.09
Dec2004 $1.49
Dec2003 $0.54
Dec2002 $1.46
Dec2001 $1.22
Dec2000 $0.59
Dec1999 $0.78
Dec1998 $0.73
Dec1997 $0.56
Dec1996 $0.50

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $1.76
Dec2015 $1.73
Dec2014 $1.95
Dec2013 $2.05
Dec2012 $1.43
Dec2011 $1.18
Dec2010 $1.24
Dec2009 $1.39
Dec2008 $1.49
Dec2007 $1.55
Dec2006 $1.64
Dec2005 $1.14
Dec2004 $1.13
Dec2003 $0.94
Dec2002 $1.08
Dec2001 $0.85
Dec2000 $0.66

Recommended Reading:

Other ModernGraham posts about the company

Dividend Investors Should Research These 10 Stocks – July 2016
10 Companies for Enterprising Dividend Investors – June 2016
10 Companies Benjamin Graham Would Invest In Today – June 2016
15 Best Stocks For Value Investors This Week – 2/13/16
Pfizer Inc Valuation – February 2016 $PFE

Other ModernGraham posts about related companies

Abbott Laboratories Valuation – August 2016 $ABT
Johnson & Johnson Valuation – August 2016 $JNJ
Regeneron Pharmaceuticals Inc Valuation – August 2016 $REGN
AmerisourceBergen Corp Valuation – July 2016 $ABC
Perrigo Co PLC Valuation – July 2016 $PRGO
AbbVie Inc Valuation – July 2016 $ABBV
Gilead Sciences Inc Valuation – July 2016 $GILD
Eli Lilly and Company Valuation – July 2016 $LLY
Zoetis Inc Valuation – June 2016 $ZTS
Merck & Co Inc Valuation – March 2016 $MRK

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Pfizer Inc Valuation – February 2016 $PFE

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Companies Benjamin Graham Would Invest In Today – February 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Pfizer Inc (PFE) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Pfizer Inc. is a global biopharmaceutical company. The Company is engaged in discovering, developing and manufacturing of healthcare products. Its products include Lyrica, the Prevnar family of products, Enbrel, Celebrex, Lipitor, Viagra, Zyvox, Sutent, EpiPen, Toviaz, Tygacil, Rapamune, Xalkori, Inlyta, Norvasc, BeneFIX, Genotropin and Enbrel, among others. It operates in three segments: Global Innovative Pharmaceutical segment (GIP), Global Vaccines, Oncology and Consumer Healthcare segment (VOC) and Global Established Pharmaceutical segment (GEP). GIP is focused on developing, registering and commercializing medications in therapeutic areas, such as inflammation, cardiovascular/metabolic, neuroscience and pain, rare diseases and women’s/men’s health. VOC focuses on the development and commercialization of vaccines and products for oncology and consumer healthcare. GEP includes its sterile injectable products and bio similar development portfolio. Its subsidiary is Hospira, Inc.

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Downloadable PDF version of this valuation:

ModernGraham Valuation of PFE

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $176,483,365,247 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.62 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 24.65% Fail
6. Moderate PEmg Ratio PEmg < 20 14.93 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.67 Pass
Score
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.62 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.69 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

PFE value chart February 2016

EPSmg $1.91
MG Growth Estimate 9.34%
MG Value $51.99
Opinion Undervalued
MG Value based on 3% Growth $27.74
MG Value based on 0% Growth $16.26
Market Implied Growth Rate 3.21%
Current Price $28.56
% of Intrinsic Value 54.94%

Pfizer Inc qualifies for the Enterprising Investor but not the more conservative Defensive Investor.  The Defensive Investor is concerned with the low current ratio as well as the insufficient earnings growth over the last ten years.  The Enterprising Investor is only initially concerned by the level of debt relative to the net current assets.  As a result, all Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company.

As for a valuation, the company appears to be undervalued after growing its EPSmg (normalized earnings) from $1.18 in 2011 to an estimated $1.91 for 2015.  This level of demonstrated earnings growth outpaces the market’s implied estimate of 3.21% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

Stage 3: Information for Further Research

PFE charts February 2016

Net Current Asset Value (NCAV) -$9.46
Graham Number $20.11
PEmg 14.93
Current Ratio 1.62
PB Ratio 2.67
Dividend Yield 3.85%
Number of Consecutive Years of Dividend Growth 5

 

[/not-level-free]

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information Sep2015
Total Current Assets $45,001,000,000
Total Current Liabilities $27,845,000,000
Long-Term Debt $29,079,000,000
Total Assets $170,867,000,000
Intangible Assets $90,514,000,000
Total Liabilities $104,029,000,000
Shares Outstanding (Diluted Average) 6,243,000,000

Earnings Per Share History

Next Fiscal Year Estimate $1.66
Dec2014 $1.42
Dec2013 $3.19
Dec2012 $1.94
Dec2011 $1.27
Dec2010 $1.02
Dec2009 $1.23
Dec2008 $1.20
Dec2007 $1.17
Dec2006 $2.66
Dec2005 $1.09
Dec2004 $1.49
Dec2003 $0.54
Dec2002 $1.46
Dec2001 $1.22
Dec2000 $0.59
Dec1999 $0.78
Dec1998 $0.73
Dec1997 $0.56
Dec1996 $0.50

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $1.91
Dec2014 $1.95
Dec2013 $2.05
Dec2012 $1.43
Dec2011 $1.18
Dec2010 $1.24
Dec2009 $1.39
Dec2008 $1.49
Dec2007 $1.55
Dec2006 $1.64
Dec2005 $1.14
Dec2004 $1.13
Dec2003 $0.94
Dec2002 $1.08
Dec2001 $0.85
Dec2000 $0.66
Dec1999 $0.63

Recommended Reading:

Other ModernGraham posts about the company

10 Undervalued Companies for Enterprising Dividend Investors – November 2015
15 Best Stocks For Value Investors This Week – 9/12/15
Pfizer Inc Analysis – September 2015 Update $PFE
10 Undervalued Companies for the Enterprising Dividend Stock Investor – August 2015
The Best Companies of the Pharmaceuticals Industry – August 2015

Other ModernGraham posts about related companies

Biogen Inc Valuation – February 2016 Update $BIIB
Perrigo Co PLC Valuation – January 2016 Update $PRGO
Johnson & Johnson Valuation – January 2016 Update $JNJ
Mylan NV Valuation – January 2016 Update $MYL
Celgene Corp Valuation – December 2015 Update $CELG
Merck & Co Valuation – November 2015 Update $MRK
Zoetis Inc. Valuation – October 2015 Update $ZTS
Biogen Inc. Valuation – October 2015 Update $BIIB
Perrigo Company PLC Analysis – October 2015 Update $PRGO
Amgen Inc. Analysis – September 2015 Update $AMGN

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Pfizer Inc Analysis – September 2015 Update $PFE

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Most Undervalued Companies for the Defensive Investor – August 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Pfizer Inc (PFE) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Pfizer Inc. is a global biopharmaceutical company. The Company is engaged in discovering, developing and manufacturing of healthcare products. Its products include Lyrica, the Prevnar family of products, Enbrel, Celebrex, Lipitor, Viagra, Zyvox, Sutent, EpiPen, Toviaz, Tygacil, Rapamune, Xalkori, Inlyta, Norvasc, BeneFIX, Genotropin and Enbrel, among others. It operates in three segments: Global Innovative Pharmaceutical segment (GIP), Global Vaccines, Oncology and Consumer Healthcare segment (VOC) and Global Established Pharmaceutical segment (GEP). GIP is focused on developing, registering and commercializing medications in therapeutic areas, such as inflammation, cardiovascular/metabolic, neuroscience and pain, rare diseases and women’s/men’s health. VOC focuses on the development and commercialization of vaccines and products for oncology and consumer healthcare. GEP includes its sterile injectable products and bio similar development portfolio. Its subsidiary is Hospira, Inc.

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To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.

[/level-free]
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Downloadable PDF version of this valuation:

ModernGraham Valuation of PFE – September 2015

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $202,942,811,828 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.14 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 26.44% Fail
6. Moderate PEmg Ratio PEmg < 20 16.87 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.06 Fail
Score
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.14 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.97 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

PFE value Chart September 2015

EPSmg $1.94
MG Growth Estimate 9.72%
MG Value $54.29
Opinion Undervalued
MG Value based on 3% Growth $28.18
MG Value based on 0% Growth $16.52
Market Implied Growth Rate 4.19%
Current Price $32.79
% of Intrinsic Value 60.40%

Pfizer Inc qualifies for the Enterprising Investor but not the more conservative Defensive Investor.  The Defensive Investor is concerned with the insufficient earnings growth over the last ten years, and the high PB ratio.  The Enterprising Investor has no initial concerns.  As a result, all Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company.

As for a valuation, the company appears to be undervalued after growing its EPSmg (normalized earnings) from $1.18 in 2011 to an estimated $1.94 for 2015.  This level of demonstrated earnings growth outpaces the market’s implied estimate of 4.19% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Pfizer Inc. (PFE)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Stage 3: Information for Further Research

PFE Charts September 2015

Net Current Asset Value (NCAV) -$6.77
Graham Number $20.68
PEmg 16.87
Current Ratio 2.14
PB Ratio 3.06
Dividend Yield 3.29%
Number of Consecutive Years of Dividend Growth 5

[/level-mg-stocks-screens-subscriber]

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Total Current Assets $51,715,000,000
Total Current Liabilities $24,143,000,000
Long-Term Debt $26,729,000,000
Total Assets $160,878,000,000
Intangible Assets $74,995,000,000
Total Liabilities $93,984,000,000
Shares Outstanding (Diluted Average) 6,243,000,000

Earnings Per Share History

Next Fiscal Year Estimate $1.75
Dec14 $1.42
Dec13 $3.19
Dec12 $1.94
Dec11 $1.27
Dec10 $1.02
Dec09 $1.23
Dec08 $1.20
Dec07 $1.17
Dec06 $2.66
Dec05 $1.09
Dec04 $1.49
Dec03 $0.54
Dec02 $1.46
Dec01 $1.22
Dec00 $0.59
Dec99 $0.82
Dec98 $0.85
Dec97 $0.57
Dec96 $0.50
Dec95 $0.42

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $1.94
Dec14 $1.95
Dec13 $2.05
Dec12 $1.43
Dec11 $1.18
Dec10 $1.24
Dec09 $1.39
Dec08 $1.49
Dec07 $1.55
Dec06 $1.64
Dec05 $1.14
Dec04 $1.13
Dec03 $0.95
Dec02 $1.10
Dec01 $0.88
Dec00 $0.69
Dec99 $0.71

Recommended Reading:

Other ModernGraham posts about the company

10 Undervalued Companies for the Enterprising Dividend Stock Investor – August 2015
The Best Companies of the Pharmaceuticals Industry – August 2015
5 Undervalued Dow Stocks to Research – August 2015
5 Undervalued Companies with a Low Beta – August 2015
5 Undervalued Dow Stocks to Research – July 2015

Other ModernGraham posts about related companies

Johnson & Johnson Analysis – September 2015 Update $JNJ
Celgene Corporation Analysis – September 2015 Update $CELG
Allergan PLC Analysis – August 2015 Update $AGN
The Best Companies of the Pharmaceuticals Industry – August 2015
Alexion Pharmaceuticals Inc. Analysis – August 2015 Update $ALXN
Akorn Inc. Analysis – Initial Coverage $AKRX
Zoetis Inc. Analysis – July 2015 Update $ZTS
Mallinckrodt PLC Analysis – Initial Coverage $MNK
Biogen IDEC Inc. Analysis – July 2015 Update $BIIB
Vertex Pharmaceuticals Analysis – July 2015 Update $VRTX

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Pfizer Inc. Analysis – June 2015 Update $PFE

500px-Pfizer_logo_(modern).svgPfizer Inc. (PFE) has shown very strong earnings growth over the last several years, which when combined with the company’s healthy dividend yield should immediately intrigue many investors. In fact, analysts believe the company has strong income potential for the future. For example, James Weiss of Weiss Investments recently wrote that even though he does not expect the stock price to appreciate, he does expect the dividend to growconsiderably. This is a great qualitative consideration that must be taken into account when making investment decisions.

However, Benjamin Graham, the father of value investing, taught that investors must take emotion out of the equation, as the most important aspect to consider is whether the company is trading at a discount relative to its intrinsic value. It is through a thorough fundamental analysis that the investor is able to make a determination about a potential investment’s merits. Here’s a look at how the company fares in the ModernGraham valuation model.

The model is inspired by the teachings of Benjamin Graham and considers numerous metrics intended to help the investor reduce risk levels. The first part of the analysis is to determine whether the company is suitable for the very conservative Defensive Investor or the less conservative Enterprising Investor, who is willing to spend a greater amount of time conducting further research.

In addition, Graham strongly suggested that investors avoid speculation to remove the subjective elements of emotion. This is best achieved by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another. By using the ModernGraham method, one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.

PFE Chart

PFE data by YCharts

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Defensive Investor – Must pass at least 6 of the following 7 tests: Score = 5/7

  1. Adequate Size of Enterprise – Market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – Current ratio greater than 2 – PASS
  3. Earnings Stability – Positive earnings per share for at least 10 straight years – PASS
  4. Dividend Record – Has paid a dividend for at least 10 straight years – PASS
  5. Earnings Growth – Earnings per share has increased by at least 1/3rd over the last 10 years, using 3-year averages at the beginning and end of the period – FAIL
  6. Moderate PEmg (price over normalized earnings) ratio – PEmg is less than 20 – PASS
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – FAIL

Enterprising Investor – Must pass at least 4 of the following 5 tests or be suitable for a Defensive Investor: Score = 5/5

  1. Sufficiently Strong Financial Condition, Part 1 – Current ratio greater than 1.5 – PASS
  2. Sufficiently Strong Financial Condition, Part 2 – Debt-to-Net Current Assets ratio less than 1.1 – PASS
  3. Earnings Stability – Positive earnings per share for at least 5 years – PASS
  4. Dividend Record – Currently pays a dividend – PASS
  5. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary

Key Data:

Recent Price $34.44
MG Value $60.91
MG Opinion Undervalued
Value Based on 3% Growth $29.39
Value Based on 0% Growth $17.23
Market Implied Growth Rate 4.25%
Net Current Asset Value (NCAV) -$6.98
PEmg 16.99
Current Ratio 2.45
PB Ratio 3.22

Balance Sheet – March 2015

Current Assets $49,443,000,000
Current Liabilities $20,222,000,000
Total Debt $29,370,000,000
Total Assets $160,640,000,000
Intangible Assets $76,188,000,000
Total Liabilities $93,336,000,000
Outstanding Shares 6,292,000,000

Earnings Per Share

2015 (estimate) $2.00
2014 $1.42
2013 $3.19
2012 $1.94
2011 $1.27
2010 $1.02
2009 $1.23
2008 $1.20
2007 $1.17
2006 $2.66
2005 $1.09

Earnings Per Share – ModernGraham

2015 (estimate) $2.03
2014 $1.95
2013 $2.05
2012 $1.43
2011 $1.18
2010 $1.24

Dividend History

PFE Dividend Chart

PFE Dividend data by YCharts

Competitive Comparison

Pfizer is very attractive when compared to some of its competitors. For example, ModernGraham valuations of both Eli Lilly (NYSE:LLY) and Merck(NYSE:MRK) indicate both of those companies are not suitable for either the Defensive Investor or the Enterprising Investor, and both are considerably overvalued at the present time.

Conclusion

Pfizer performs well in the ModernGraham model and is suitable for Enterprising Investors. The Defensive Investor is concerned with the insufficient earnings growth over the last ten years, along with the poor PB ratio, while the Enterprising Investor has no initial concerns. As a result, all Enterprising Investors should feel very comfortable proceeding to the next part of the analysis, which is a determination of the company’s intrinsic value.

When it comes to valuation, it is critical to consider the company’s earnings history. In this case, the company has grown its EPSmg (normalized earnings) from $1.18 in 2011 to an estimated $2.03 for 2015. This is a strong level of growth and is well above the market’s implied estimate of only 4.25% annual earnings growth over the next 7-10 years.

Here, actual growth in EPSmg over the last several years has averaged nearly 14.4% annually, so the market is expecting a very significant drop in earnings growth. The ModernGraham valuation model reduces the historical growth to a more conservative figure, assuming that some slowdown will occur, but still estimates a growth figure much higher than the market’s implied rate. Therefore, the model returns an estimate of intrinsic value well above the current price, indicating the company is significantly undervalued at the present time.

Enterprising Investors should take this information regarding the company’s valuation and proceed with further research into whether the company would be suitable for individual portfolios, as it has passed a ModernGraham review.

Disclaimer:  The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

[/level-mg-stocks-screens-subscriber]

Pfizer Inc. Quarterly Valuation – March 2015 $PFE

500px-Pfizer_logo_(modern).svg

Pfizer Inc. does fairly well in the ModernGraham model, and is suitable for Enterprising Investors. The Defensive Investor is concerned with the insufficient earnings growth over the last ten years, and the high PB ratio, while the Enterprising Investor has no initial concerns. As a result, Enterprising Investors should feel very comfortable proceeding to the next part of the analysis, which is a determination of the company’s intrinsic value.

When it comes to valuation, it is critical to consider the company’s earnings history. In this case, the company has grown its EPSmg (normalized earnings) from $1.24 in 2010 to $1.95 for 2014. This is a strong level of demonstrated growth, which is well above the market’s implied estimate of 4.38% annual earnings growth over the next 7-10 years. Here, the historical growth in EPSmg over the last five years is around 11.41% per year. The ModernGraham valuation model reduces the historical growth to a more conservative figure, assuming that some slowdown will occur. Therefore, the model returns an estimate of intrinsic value well above the current price, indicating the company is significantly undervalued at the present time.

Be sure to check out previous ModernGraham valuations of Pfizer Inc. (PFE) for a greater perspective!

Read the full valuation on Seeking Alpha!

PFE Chart

PFE data by YCharts

Disclaimer: The author did not hold a position in Pfizer Inc. (PFE) at the time of publication and had no intention of changing that position within the next 72 hours. Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

Pfizer Inc. Quarterly Valuation – December 2014 $PFE

500px-Pfizer_logo_(modern).svg

Pfizer passes the initial requirements of both the Defensive Investor and the Enterprising Investor. In fact, the company receives a perfect score for both investor types, a rare accomplishment which indicates the company is in a very strong financial position. As a result, value investors should feel very comfortable proceeding to the next part of the analysis, which is a determination of the company’s intrinsic value.

When it comes to that valuation, it is critical to consider the company’s earnings history. In this case, the company has grown its EPSmg (normalized earnings) from $1.24 in 2010 to an estimated $2.22 for 2014. This is a fairly strong level of demonstrated growth which is well above the market’s implied estimate for earnings growth of 2.95% over the next 7-10 years. In fact, the historical growth is around 15.75% per year, so the market is expecting a very significant drop in earnings growth. The ModernGraham valuation model reduces the historical growth to a more conservative figure, assuming that some slowdown will occur, and therefore returns an estimate of intrinsic value falling above the current price, indicating the company is undervalued at the present time.

Be sure to check out previous ModernGraham valuations of Pfizer Inc. for a greater perspective!

Read the full valuation on Seeking Alpha!

PFE Chart

PFE data by YCharts

Disclaimer:  The author did not hold a position in Pfizer Inc. (PFE) or in any other company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

Pfizer Inc. Quarterly Valuation – June 2014 $PFE

500px-Pfizer_logo_(modern).svgBenjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 5 Undervalued Companies for the Defensive Investor Near 52 Week Lows.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a specific look at how Pfizer Inc. (PFE) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Pfizer Inc. (Pfizer) is a research-based, global biopharmaceutical company. The Company manages its operations through five segments: Primary Care; Specialty Care and Oncology; Established Products and Emerging Markets; Animal Health, and Consumer Healthcare. The Company’s diversified global healthcare portfolio includes human and animal biologic and small molecule medicines and vaccines, as well as nutritional products and consumer healthcare products. Its Animal Health business unit discovers, develops and sells products for the prevention and treatment of diseases in livestock and companion animals. Primary Care operating segment includes revenues from human prescription pharmaceutical products primarily prescribed by primary-care physicians. In November 2012, the Company acquired NextWave Pharmaceuticals, Inc. On November 30, 2012, the Company completed the sale of its Nutrition business.

PFE Chart

PFE data by YCharts

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 7/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 – PASS
  3. Earnings Stability – positive earnings per share for at least 10 straight years – PASS
  4. Dividend Record – has paid a dividend for at least 10 straight years – PASS
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – PASS
  6. Moderate PEmg ratio – PEmg is less than 20 – PASS
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – PASS

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 5/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – PASS
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – PASS
  3. Earnings Stability – positive earnings per share for at least 5 years – PASS
  4. Dividend Record – currently pays a dividend – PASS
  5. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary

Key Data:

Recent Price $29.42
MG Value $33.89
MG Opinion Fairly Valued
Value Based on 3% Growth $23.75
Value Based on 0% Growth $13.92
Market Implied Growth Rate 4.73%
Net Current Asset Value (NCAV) -$5.68
PEmg 17.96
Current Ratio 2.33
PB Ratio 2.41

Balance Sheet – 3/30/2014

Current Assets $57,793,000,000
Current Liabilities $24,790,000,000
Total Debt $27,649,000,000
Total Assets $171,808,000,000
Intangible Assets $80,589,000,000
Total Liabilities $94,039,000,000
Outstanding Shares 6,378,720,000

Earnings Per Share

2014 (estimate) $2.19
2013 $1.65
2012 $1.26
2011 $1.11
2010 $1.02
2009 $1.23
2008 $1.19
2007 $1.18
2006 $1.52
2005 $1.03
2004 $1.44

Earnings Per Share – ModernGraham

2014 (estimate) $1.64
2013 $1.33
2012 $1.16
2011 $1.13
2010 $1.16
2009 $1.23

Dividend History

PFE Dividend Chart

PFE Dividend data by YCharts

Conclusion:

Pfizer achieves a rare feat, which is satisfying all of the requirements of both the Defensive Investor and the Enterprising Investor.  Not many companies meet this level of low-risk, and as a result, both investor types should have few concerns about the financial stability of the company.  As a result, value investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company and comparing it to other opportunities through a review of ModernGraham’s valuation of Merck & Co. (MRK) and ModernGraham’s valuation of Bristol-Myers Squibb (BMY).  From a valuation perspective, the company appears to be fairly valued after growing its EPSmg (normalized earnings) from $1.16 in 2010 to an estimated $1.64 for 2014.  This level of demonstrated growth supports the market’s implied estimate of 4.73% earnings growth and leads the ModernGraham valuation model to return an estimate of intrinsic value that falls within a margin of safety relative to the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Pfizer Inc. (PFE)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Be sure to review the previous ModernGraham Valuations of Pfizer Inc. (PFE)!

Disclaimer:  The author did not hold a position in Pfizer Inc. (PFE) or any other company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.

Logo taken from wikipedia; this article is not affiliated with the company in any manner.

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