Pfizer Inc (PFE)

Conclusion

Pfizer Inc. discovers, develops, manufactures and sells biopharmaceutical products, including Eliquis, the Prevnar vaccine family and Paxlovid. At 29.23 USD on 2026-11-09, the shares carry a market capitalisation of 166.6 billion USD and an enterprise value of 215.0 billion USD.

The verdict is fair. The P/E of 41.3 compares with a ten-year median of 19.2, and EV/EBITDA of 16.0 with a median of 12.5, while P/FCF of 14.1 sits below its median of 16.7. The DCF gives 30.14 USD per share at a discount rate of 8.9%. The fair value band runs from 25.16 to 37.74 USD with a midpoint of 31.45 USD, a margin of safety of 7.6%. The reverse DCF shows the price implies growth of 2.1% a year, against revenue growth of 8.5% over five years, but free cash flow per share shrinking 5.0% a year over the same period.

What holds the case up: free cash flow conversion of 292.3% on a trailing basis, a current ratio of 1.42, and eight earnings beats in eight quarters. What could break it: ROIC of 5.1% against a WACC of 7.8%, interest coverage of 2.57, and an EPS compound growth of -37.0% over three years.

Financial health

Financial strength is yellow: the current ratio of 1.42 is assessed good, but interest coverage of 2.57 is assessed bad. The quick ratio is 0.90, net debt to EBITDA is 3.59, assessed neutral, and debt to equity is 0.70. The Altman Z-score is 2.16, in the grey zone, an area where the model does not clearly signal safety or distress. Pfizer is a manufacturer, so the Altman model applies. Insolvency risk: low, about 0.3% by the estimate of the Ohlson model over one to two years.

Earnings quality

Earnings quality is green. Free cash flow conversion is 292.3% on a trailing basis and 111.7% over five years, and the accrual ratio of -1.9% is assessed good. Stock-based compensation is 1.7% of revenue, and free cash flow after it is 10.68 billion USD. The share count has risen 0.2% a year over five years, so there have been no net buybacks. The Piotroski score is 6 of 9, and the Beneish M-score of -2.48 reads unlikely for manipulation. Pfizer beat estimates in all eight of the last quarters, by an average of 25.4%. Revisions are negative: 10 current-year estimates were lowered and 2 raised in the last 30 days, and next-year EPS growth is estimated at -3.4%.

Profitability

Profitability is yellow. The operating margin of 23.8% against a ten-year median of 24.2% is assessed good. ROIC of 5.1% against a WACC of 7.8% is assessed bad, with ROIC minus WACC at -2.7% and labelled as destroying value. The five-year median ROIC is 8.3%. Gross margin is 73.4% against a median of 75.5%, and the net margin of 6.3% sits well below its median of 24.5%. ROE is 4.5%. The DuPont split shows a net margin of 12.4%, asset turnover of 0.30 and an equity multiplier of 2.41 at year-end 2025, so leverage adds to the return but the return remains low.

Growth

Growth is red. Revenue compound growth is -14.8% over three years, 8.5% over five years and 2.5% over ten years. EPS compound growth is -37.0% over three years, -3.4% over five years and -13.1% over ten years. Free cash flow per share compound growth is -29.4%, -5.0% and -17.1% over the same periods. Revenue grew in 6 of 10 comparable years. The five-year revenue rise is the one favourable signal; the three-year decline is the sharpest recent move.

Valuation

Valuation is yellow, based on one neutral signal. The P/E of 41.3 is a premium of 115.4% to its ten-year median of 19.2, and EV/EBITDA of 16.0 is a premium of 27.6% to 12.5. P/FCF of 14.1 is a discount of 15.3% to 16.7, P/S of 2.6 a discount of 10.8% to 2.9, and P/B of 1.9 a discount of 32.3% to 2.8. The DCF gives 30.14 USD per share at a discount rate of 8.9%, with the terminal value making up 54.7% of the value. The fair value from historical multiples is 32.75 USD. The reverse DCF implies growth of 2.1% against revenue growth of 8.5% over five years. The dividend yield is 5.9%, the forward yield 5.8%, and the payout on free cash flow 83.1%. The fair value band rests on fixed assumptions, such as a 5% equity risk premium, and is not a price target.

Risks

Interest coverage of 2.57 leaves little room: a fall in operating earnings would weaken it further, and net debt to EBITDA of 3.59 would become harder to carry. ROIC below WACC means new investment currently earns less than its cost of capital, so value creation depends on a return to the five-year median ROIC of 8.3%. Negative EPS and free cash flow growth over three years, and lower estimates for next year, would test the fair value band if they persist. This analysis has no debt maturity schedule and no revenue by segment, so refinancing timing and the concentration of the product portfolio cannot be assessed.