Pfizer Inc. (NYSE: PFE)
Quality Value Investing Research Report | $PFE Updated Coverage | September 2024
In this updated coverage research report, we’ll reexamine the QVI Real-Time Stock Picks health care sector holding, Pfizer Inc. PFE 0.00%↑, to see if it continues to meet Quality Value Investing’s criteria based on our checklist analysis of the business’s current wealth and the share price’s present value.
Pfizer Inc. | Current Wealth
Value Proposition
Pfizer is a dividend-paying large-cap stock in the health care sector’s pharmaceuticals industry. It was added to the QVI Real-Time Stock Picks on September 30, 2022, at a $39.72 cost basis per share, adjusted for dividends.
Pfizer Inc. discovers, develops, manufactures, markets, distributes, and sells biopharmaceutical products in the United States, Europe, and internationally. The company was founded in 1849 and is headquartered in New York, New York, USA.
Economic Moat
Morningstar assigns Pfizer a wide moat rating based on its view of the company’s economies of scale, powerful distribution network, and the pricing power of its patent-protected drugs.
QVI’s Value Proposition Elevator Pitch for PFE:
Pfizer is a blue-chip pharmaceutical whose drug pipeline is reportedly improving despite the reversal of substantial pandemic-era growth and cash windfalls from its COVID-19 vaccine and treatments.
QVI’s value proposition rating for Pfizer: Neutral.
Returns on Management
Revenue Growth and Net Profit Margin
Per the table below, Pfizer’s trailing three-year annualized revenue growth was double-digit positive, still underperforming the S&P 500 topline growth of 18.5%. In contrast, the company’s negative revenue growth of -29.0% lagged the broader market’s 4.6% for the most recently reported twelve months.
Further down the income statement, Pfizer had a negative net profit margin from a 71.3% gross margin, underperforming the S&P 500’s net of 10.8% from a gross of 40.7%.
Returns on Equity and Invested Capital
Pfizer’s senior management produced a negative return on equity, or ROE, below QVI’s targeted threshold and the S&P 500’s ROE of 17.4%.
Stock buyback programs often elevate ROE. For example, Pfizer has not made significant share repurchases since March 2022.
Pfizer’s negative return on invested capital, or ROIC, underperformed QVI’s threshold and the broader market’s 22.1% return. Moreover, the company’s ROIC was less than its weighted average cost of capital, or WACC, demonstrating that its senior executives are currently below-average capital allocators. (Source of WACC: GuruFocus)
QVI’s business fundamentals rating for Pfizer: Bearish.
Next, we’ll look at the company’s enterprise downsize risks, the stock price’s present value, share price downside risks, and the investment thesis, each exclusive to Quality Value Investing’s premium (paying) subscribers.
Unless noted, all data presented is sourced from Charles Schwab & Co. as of the market close on September 24, 2024, and intended for illustration only.
Disclosure: As of the date of this research report, I/we had no beneficial position in PFE common shares in our family portfolio. I wrote this report myself, and it expresses my own opinions. I am not receiving compensation for it other than from Substack paid subscriptions. I have no business relationship with any company whose stock is mentioned in this post.
Additional Disclosure: Quality Value Investing by David J. Waldron’s primary ticker research reports are for informational purposes only. The accuracy of the data cannot be guaranteed. Narrative and analytics are impersonal, i.e., not tailored to individual needs nor intended for portfolio construction beyond his family portfolio, which is presented solely for educational purposes. David is an individual investor and author, not an investment adviser. Readers should always engage in independent research or due diligence and consider, as appropriate, consulting a fee-only certified financial planner, licensed discount broker/dealer, flat fee registered investment adviser, certified public accountant, or specialized attorney before making any investment, income tax, or estate planning decisions.
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