PFE Stock Report

2-Year Price History

Ockham’s Rating

PFE Stock Evaluation

As of the time of this report, there has been relatively little movement in price for PFE over the last week. Furthermore, there has been no revision to earnings expectations or guidance. Given these factors as well as those contained in our complete analysis, we do not have enough of a catalyst to necessitate a rating change. For more detail please read the rest of our analysis of PFE’s valuation.

PFE Revenue

As we have often noted, in our valuation methodology, "Cash is King." Well, it goes without saying that if a company cannot produce sales then there is no ability to generate cash flow. By that logic we look very closely at revenue numbers as our second most important factor in valuing a company’s stock. We have established reasonable Price to Sales per share ranges based on historical data of the last 10 years. For, PFE the high and low end of the Price to Sales per share ratios are 4.74x and 3.24x respectively.

Notice that PFE’s current Price to Sales per share ratio is 2.10x, which is quite a bit below what we consider a normal Price to Sales ratio for this stock. Given normal conditions and a price of $15.19, PFE is 48% below where we would expect to see it. This will beneficially factor into our final analysis of PFE as it is not often that this stock sinks to these levels.

PFE Cash Earnings

Looking at PFE specifically in their Cash Earnings capabilities, Ockham views PFE as significantly below its historical average multiple of Cash Earnings. Looking at the last 10 years we can get a good understanding of what investors have grown to expect from PFE. For example, PFE’s Cash Earnings ratio per share has fluctuated between 11.80 and 17.29 over this historical timeframe. This range is based upon a proprietary weighted methodology at Ockham, but can clearly show an investor where PFE is with respect to prior business periods.

So with PFE’s current price (latest close of $15.19) and most recent level of Cash Earnings reported, we see significant opportunity from a value perspective. At its current price level, PFE is 45% below its average level of Price to Cash Earnings on a historical basis. This means that investors were willing to pay for a much higher stock price than currently for the same level of Cash in the past, on a relative basis. There are a couple of important things to remember, however. First, value doesn’t exist in a vacuum. So if the market doesn’t recognize this value, even a great disparity in Price to Cash Earnings cannot force an immediate stock price reaction. Second, patience is key when looking at securities that have reached these levels of Price to Cash Earnings versus their historical norms. So be patient with PFE.

PFE Dividends

A positive Ockham rating does not require a company to pay out an inviting dividend or a dividend at all. However, we believe dividends provide a useful measure of a company’s inherent expectations.

Comparable to our analysis of Sales and Cash Earnings per share, we examine dividend yields from PFE against the historic high and low levels over an available data range. Because PFE has an established history of paying a dividend to shareholders, there is value in comparing recent dividends to historical dividends. In PFE’s case, the estimated annual dividend is $0.64 producing a current dividend yield of 4.21%. The highest dividend yield from PFE in recent history was 8.96% while the lowest dividend yield was 0.73%. PFE is not making us feel all that confident when their current dividend yield is below the historical median by 13.11%.