Thursday 11 February 2016

Analysis of Pfizer

Pfizer, an American biopharmaceutical company

Company: Pfizer

ISIN US7170811035 | WKN 852009

Business: An American biopharmaceutical company. It is difficult to talk about pillars that they are standing on because it is not but still they are focusing their efforts into six different fields: Immunology & Inflammation, CV & Metabolic Diseases, Oncology, Vaccines, Neuroscience & Pain and finally Rare Disease. In each field they are providing several different medications.

Active: Global but I found nothing more accurately. They do however claim to place major focus in the markets of the United States, China, Canada, Germany, Italy and Brazil.

P/E: 22.8

This company was analysed due to a request posted on the Analysis Requests page. Sorry that I am late with this one. I forgot it.

contrarian values of P/E, P/B, ROE as well as dividend for Pfizer

The P/E of Pfizer is too high for me with 22.8 and the P/B is ok with 2.5 but still it become a clear no go from Graham. The earnings to sales looks ok with 16% even though I would have thought it to be higher and the ROE is not very good with only 10.9%. the book to debt ratio is so, so with 0.7.
In the last five years they have had an awful yearly revenue growth rate of -6.2% which then gives them a motived P/E of around 8 to 10 which means they are overvalued on the market today.
They are attempting to stay on top of things and for this reason they are spending 100% of their earnings on R&D which I also find to be a lot.
For an American company they pay a very nice dividend of 3.9% which however correspond to 89%! of their earnings which means that they better start pushing up those earnings and soon!
They have had massive share buyback programs running in the last couple of years which I like however they have decided not to retire the shares which I do not like. One can also discuss how correct it is to buy back shares when a company is trading at a P/E above 20. I am not in favour.

Conclusion: Graham says no and so do I. Their revenue is shrinking as is their earnings but I must say that they have managed to keep up the earnings very well. Still... the P/E is too high, the ROE is too low and they are paying out too much money in dividends for me to decide to step into Pfizer. I will not invest in Pfizer at this time.

If this analysis is outdated then you can request a new one.

No comments: