By Rob Otman
Pfizer (NYSE: PFE) is a $201 billion company today. Investors that bought shares one year ago are sitting on a 6.45% total return. That’s below the S&P 500’s return of 17.12%.
Pfizer stock is underperforming the market. It’s beaten down, but recently beat earnings expectations. So is it a good time to buy? To answer this question we’ve turned to the Investment U Stock Grader. Our research team built this system to diagnose the financial health of a company.
Our system looks at six key metrics…
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Earnings-per-Share (EPS) Growth: Pfizer reported a recent EPS growth rate of 6.12%. That’s below the pharmaceutical industry average of 46.66%. That’s not a good sign. We like to see companies that have higher earnings growth.
Price-to-Earnings (P/E): The average price-to-earnings ratio of the pharmaceutical industry is 33.58. And Pfizer’s ratio comes in at 18.39. It’s trading at a better value than many of its competitors.
Debt-to-Equity: The debt-to-equity ratio for Pfizer stock is 70.33. That’s above the pharmaceutical industry average of 59.35. That’s not a good sign. Pfizer’s debt levels should be lower.
Free Cash Flow per Share Growth: Pfizer’s FCF has been lower than its competitors over the last year. That’s not good for investors. In general, if a company is growing its FCF, it will be able to pay down debt, buy back stock, pay out more in dividends and/or invest money back into the business to help boost growth. It’s one of our most important fundamental factors.
Profit Margins: The profit margin of Pfizer comes in at 24.42% today. And generally, the higher, the better. We also like to see this margin above that of its competitors. Pfizer’s profit margin is above the pharmaceutical average of 12.23%. So that’s a positive indicator for investors.
Return on Equity: Return on equity tells us how much profit a company produces with the money shareholders invest. The ROE for Pfizer is 11.48%, and that’s below its industry average ROE of 18.45%.
Pfizer stock passes two of our six key metrics today. That’s why our Investment U Stock Grader rates it as a hold with caution.
Please note that our fundamental factor checklist is just the first step in performing your own due diligence. There are many other factors you should consider before investing. That’s why The Oxford Club offers more than a dozen newsletters and trading advisories all aimed at helping investors grow and maintain their wealth. For more details, click here.
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Source:: Investment You
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