Last update on 2024-06-07

Pfizer Inc (PFE) - Piotroski F-Score Analysis for Year 2023 (Final Score: 3/9)

Pfizer Inc. (PFE) scored 3/9 in the 2023 Piotroski F-Score, indicating areas for financial improvement, particularly in profitability, liquidity, and asset efficiency.

Short Analysis - Piotroski Score: 3

We're running Pfizer Inc (PFE) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

The Piotroski F-Score is a model that uses 9 key criteria to gauge a company's financial health based on profitability, liquidity, and operating efficiency. In applying this model to Pfizer Inc. (PFE), the company scores a 3 out of 9, indicating weaker financial fundamentals based on the following analyses: 1. Pfizer reports a positive net income of $2.12 billion for 2023 but shows a drastic decline from $31.37 billion in 2022. 2. A positive cash flow from operations of $8.7 billion is appreciated but again lower compared to previous years ($32.6 billion in 2021). 3. Return on Assets (ROA) has significantly decreased to 0.01 in 2023 from 0.1657 in 2022. 4. Operating Cash Flow ($8.7 billion) exceeds Net Income ($2.119 billion). 5. Leverage is increasing, with a ratio up from 0.1619 in 2022 to 0.2671 in 2023. 6. Current Ratio has decreased from 1.2165 in 2022 to 0.9067 in 2023. 7. Total outstanding shares have increased from 5,608,000,000 in 2022 to 5,643,000,000 in 2023, indicating dilution. 8. Gross Margin decreased from 0.6577 in 2022 to 0.5734 in 2023. 9. Asset Turnover ratio declined from 0.5299 in 2022 to 0.2761 in 2023.

Insights for Value Investors Seeking Stable Income

Based on the Piotroski F-Score of 3, Pfizer Inc. (PFE) is showing signs of financial stress in several key areas such as profitability, liquidity, and asset utilization. While they have a positive net income and cash flow, significant declines in these values from previous years suggest underlying challenges. Increasing leverage, declining return on assets, worsening current ratio, and share dilution further indicate potential risks. Therefore, it may be prudent for investors to exercise caution and thoroughly investigate these issues before committing to investing in Pfizer Inc. Additional due diligence is recommended to understand the broader context behind these trends.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of Pfizer Inc (PFE)

Company has a positive net income?

Net income serves as a crucial metric for assessing a company's profitability over a year, making it essential for evaluating financial performance.

For the fiscal year 2023, Pfizer Inc. reported a net income of $2.12 billion. This figure is indeed positive, earning it 1 point in the Piotroski score. However, comparing it to historical data reveals a worrying trend. In 2022, the net income was considerably higher at $31.37 billion, marking a steep decline of over 93% year-over-year. This plunge is the most significant in the last two decades, where Pfizer has typically demonstrated robust profitability, including a peak of $22.00 billion in 2013. Despite achieving a positive net income in a challenging year, investor confidence might be dented by this downturn.

Company has a positive cash flow?

The criterion checks if the Cash Flow from Operations (CFO) for Pfizer Inc. (PFE) is positive. A positive CFO indicates that the company is generating enough cash from its core business operations, which is a sign of strong financial health.

For the year 2023, Pfizer Inc. (PFE) reported a Cash Flow from Operations (CFO) of $8.7 billion. This figure is indeed positive, thereby warranting a score of 1 point according to the Piotroski F-Score criteria. To better understand the trend, it is useful to look at the last 20 years of operating cash flows for Pfizer. Historically, the company has demonstrated strong CFO, with figures such as $32.6 billion in 2021 and $29.2 billion in 2020. The recent $8.7 billion is considerably lower compared to prior years, which indicates that while the CFO is positive, the amount has significantly declined from its peak levels. This trend could be interpreted as a sign of potential challenges or strategic shifts within the company that may be affecting its operational efficiency. Therefore, although the positive CFO adds a point for the Piotroski F-Score, the downward trend merits attention for future financial planning and analyses.

Return on Assets (ROA) are growing?

Change in Return on Assets (ROA) examines how efficiently a company is utilizing its assets to generate profit year-over-year.

When analyzing Pfizer Inc's Return on Assets (ROA) from 2022 to 2023, we observe a stark decrease from 0.1657 in 2022 to 0.01 in 2023, indicating a deteriorating efficiency in utilizing assets to generate profits. This is clear when compared to the last 20 years of data, where Pfizer's operating cash flow has shown considerable fluctuation but generally positive growth, while the industry's median ROA has remained consistently above 0.65. Given this decline, Pfizer scores 0 points on this criterion as the ROA has not increased in 2023.

Operating Cashflow are higher than Netincome?

Operating Cash Flow higher than Net Income compares whether a company's operating cash flow exceeds its net income.

For fiscal year 2023, Pfizer Inc. reported an Operating Cash Flow of $8.7 billion and a Net Income of $2.119 billion. As the Operating Cash Flow exceeds the Net Income, Pfizer scores 1 point for this criterion. This positive disparity indicates that Pfizer's core operations are healthy and generating substantial cash, surpassing its net earnings even in what looks like a financially challenging year. Historically, except for 2023, the company maintained significantly higher cash flow from operations, peaking at an impressive $32.58 billion in 2021. Recently, the reduction in both Net Income and Operating Cash Flow suggests operational pressures likely stemming from external factors or strategic investments.

Liquidity of Pfizer Inc (PFE)

Leverage is declining?

Leverage measures the extent to which a company is financing its operations through debt instead of wholly owned funds. It indicates financial health and risk.

From the provided figures, Pfizer's leverage ratio has increased from 0.1619 in 2022 to 0.2671 in 2023. This suggests that the company has taken on more debt relative to its equity in the past year. According to historical data, the leverage ratio has generally been fluctuating but has seen a significant increase in 2023, jumping to its highest point in two decades. This greater dependency on debt may expose the company to increased financial risk, especially in times of economic uncertainty or rising interest rates. Thus, in terms of the Piotroski Analysis, a score of 0 would be awarded for this criterion, indicating a negative trend.

Current Ratio is growing?

The Current Ratio measures a company's ability to pay off its short-term liabilities with its short-term assets.

Analyzing Pfizer Inc (PFE)'s Current Ratio data, we see a significant decrease from 1.2165 in 2022 to 0.9067 in 2023. This is a drop of approximately 25.5%, indicating that Pfizer's ability to cover its short-term obligations with its short-term assets has worsened. As compared to the industry median for 2023 (1.2749), Pfizer's ratio is also notably lower, suggesting potential liquidity concerns. Based on this data, no points should be added for the increase in the Current Ratio in 2023, as the ratio has indeed decreased.

Number of shares not diluted?

This criterion examines changes in a company's outstanding shares to gauge potential dilution or buyback activity. A decrease in shares is positive as it signals buybacks, enhancing shareholder value.

When comparing Pfizer Inc.'s outstanding shares, there is an increase from 5,608,000,000 in 2022 to 5,643,000,000 in 2023. According to the Piotroski Score criteria, this increase results in 0 points since share dilution suggests potential drawbacks, such as decreased earnings per share and possible signals of raising capital through equity rather than debt. Reviewing a 20-year historical context reveals fluctuations in Pfizer’s outstanding shares, from 7,286,000,000 shares in 2003 to varying buybacks and issuances over the years, culminating in the current upward trend. Continuous monitoring is necessary to understand if this increment is part of a broader capital raising strategy or an isolated adjustment.

Operating of Pfizer Inc (PFE)

Cross Margin is growing?

The change in Gross Margin compares the Gross Margin of two consecutive years to determine profitability trends.

Pfizer's gross margin decreased from 0.6577 in 2022 to 0.5734 in 2023. This is a decline and indicates lower profitability. Comparing this with the industry's median gross margin of 0.7176 in 2023 versus 0.7 in 2022, Pfizer significantly underperformed the industry. Additionally, looking at the trend over the last 20 years, we observe a general decline from highs around 0.8564 in 2004, illustrating consistent challenges in maintaining high margins. Therefore, no point is awarded for this criterion.

Asset Turnover Ratio is growing?

Asset Turnover ratio measures a company's efficiency in using its assets to generate sales. A higher ratio indicates better performance.

The Asset Turnover ratio for Pfizer Inc (PFE) has decreased from 0.5299 in 2022 to 0.2761 in 2023. This represents a significant decline, which is considered a negative trend. A lower Asset Turnover ratio suggests that Pfizer is generating less revenue per dollar of assets, indicating potential inefficiencies or a decline in sales performance relative to the assets held.