Pfizer (PFE) Dividend Stock Analysis
The Pfizer dividend has been paid since 1980 and has increased the dividend for 8 consecutive years; qualifying the company as a Dividend Challenger. PFE used to be a Dividend Aristocrat until it cut its dividend during the great recession.
Dividend Yield 3.7%
Current Dividend: $1.36
Cash Flow From Operations (CFO) Per Share (ttm): $2.55
Free Cash Flow Per Share (ttm): $2.19
Market Capitalization: $217 B
Enterprise Value: $240 B
Dividend Analyzer Checklist
(updated February 2018)
Valuation Score (20/34 points)
Free Cash Flow Yield (ttm): 6.0% (11/17 points)
EV to EBIT (ttm): 16.8
EV to EBITDA (ttm): 11.9 (9/17 points)
Price to Sales Ratio (ttm): 4.2
Price to Book Value (ttm): 3.6
Price to Earnings Ratio (P/E) (ttm): 10
PE 10: 24
Profitability Score (14/33 points)
Operating Earnings Yield (ttm): 6.3% (7/15 points)
Net Income (ttm): $21308 M
Gross Profit (ttm): $41307 M
Total Assets: $172151 M
Gross Profitability Ratio = GP / Total Assets: 24% (7/18 points)
Cash Return On Invested Capital (CROIC)(tttm): 13%
Return on Invested Capital (ROIC): 21%
Dividend Safety Score (22/33 points)
Dividend Payout Ratio (ttm): 27%
Cash Dividend Payout Ratio (ttm): 57% (6/12 points)
Net Financial Debt: $28935 M
Total Assets: $172151 M
Net Financial Debt / Total Assets: 17% (8/12 points)
Net Financial Debt to EBITDA (ttm): 218%
Piotroski Score (1-9) (TTM): (8/9 points)
TOTAL POINTS – (56/100) (50 is an average score)
Earnings Report: 1/03/18
Next Earnings Report: 4/03/18
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Rankings & Recommendations
(updated February 2018)
Pfizer is ranked #143 overall (out of 432) and #12 (out of 36) in the Healthcare sector by the Dividend Analyzer.
Type of Investor / Recommendation
Large Diversified Dividend Portfolios / Can Be Considered
Looking For Exposure to Healthcare Sector / Can Be Considered
Deep Value Investors / Can Be Considered
DVB Portfolio Stocks – None
AAAMP Global Value Portfolio – None
AAAMP Retirement Growth & Income Portfolio – None
AAAMP Treasure Trove Twelve Portfolio – None
Industry: Drug Manufacturers – Major
Pfizer is a research-based, biopharmaceutical company whose goal is to produce healthcare products that extend and improve the lives of its customers. Prescription drugs and vaccines represent a majority of Phizer’s approximately 52 billion in revenues.
The company operates in 3 segments:
Global Established Pharmaceutical (GEP) (50%)
One half the company’s business is derived from established products that are generic, or mature, patent protected products. Products include Lipitor, Viagra, Zyvox, Celebrex, and Norvasc. Basically this segment concentrates on all the legacy established products in the developed and emerging markets.
Global Innovative Pharmaceutical (GIP) 30%
This segment focuses on rare diseases, neuroscience and pain, inflammation, cardiovascular metabolic, and men’s/women’s health in general.
Global Vaccines, Oncology, Consumer Healthcare (GVOC) (20%)
This segment focuses on vaccines, oncology, and over the counter consumer healthcare products. These are very definitive specializations that only a few companies such as Pfizer have the capability and resources to tackle.
Strategic assets (patents), economies of scale, and barriers to entry are important competitive advantages for Pfizer. Pfizer’s global salesforce and patent-protected drugs produce large amounts of cash flow. This has provided high returns on invested capital and allowed the company to return significant cash to shareholders.
Biopharmaceutical research & development is expensive, complex, and risky because it requires long periods of time to bring products to market.
Expiration of patent protection is one of Pfizer’s biggest weaknesses. In particular, the loss of Viagra (2017) and Lyrica (2019) will be large challenges for the company.
Pfizer is being squeezed from three angles.
Drug approval authorities are becoming more risk adverse.
Buyers are consolidating to increase their purchasing power and demanding lower margins.
Changes in healthcare insurance are putting downward pressure on prices.
Pfizer’s strong position in the industry makes it a great partner for smaller drug companies that don’t have the resources to go it alone. Large cash flows from established products provides R&D capital needed for future growth.
The majority of Pfizer’s revenues come from a highly regulated and extremely competitive industry. Threats to Pfizer include: loss of patent protection, a more rigorous FDA, managed care co-ops demanding lower prices, a lack of innovation from R&D, healthcare legislation, and litigation.