Stock Analysis on Net
Stock Analysis on Net

Pfizer Inc. (NYSE:PFE)

Present Value of Free Cash Flow to the Firm (FCFF)

Microsoft Excel

In discounted cash flow (DCF) valuation techniques the value of the stock is estimated based upon present value of some measure of cash flow. Free cash flow to the firm (FCFF) is generally described as cash flows after direct costs and before any payments to capital suppliers.

Intrinsic Stock Value (Valuation Summary)

Pfizer Inc., free cash flow to the firm (FCFF) forecast

US$ in millions, except per share data

Microsoft Excel
Year Value FCFFt or Terminal value (TVt) Calculation Present value at 8.71%
01 FCFF0 11,370
1 FCFF1 11,108 = 11,370 × (1 + -2.30%) 10,219
2 FCFF2 11,001 = 11,108 × (1 + -0.96%) 9,310
3 FCFF3 11,042 = 11,001 × (1 + 0.37%) 8,596
4 FCFF4 11,231 = 11,042 × (1 + 1.71%) 8,043
5 FCFF5 11,572 = 11,231 × (1 + 3.04%) 7,623
5 Terminal value (TV5) 210,516 = 11,572 × (1 + 3.04%) ÷ (8.71% – 3.04%) 138,683
Intrinsic value of Pfizer Inc. capital 182,474
Less: Debt (fair value) 63,154
Intrinsic value of Pfizer Inc. common stock 119,320
 
Intrinsic value of Pfizer Inc. common stock (per share) $20.94
Current share price $25.21

Based on: 10-K (reporting date: 2025-12-31).

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Disclaimer!
Valuation is based on standard assumptions. There may exist specific factors relevant to stock value and omitted here. In such a case, the real stock value may differ significantly form the estimated. If you want to use the estimated intrinsic stock value in investment decision making process, do so at your own risk.

Weighted Average Cost of Capital (WACC)

Pfizer Inc., cost of capital

Microsoft Excel
Value1 Weight Required rate of return2 Calculation
Equity (fair value) 143,683 0.69 10.87%
Debt (fair value) 63,154 0.31 3.78% = 4.50% × (1 – 16.04%)

Based on: 10-K (reporting date: 2025-12-31).

1 US$ in millions

   Equity (fair value) = No. shares of common stock outstanding × Current share price
= 5,699,444,169 × $25.21
= $143,682,987,500.49

   Debt (fair value). See details »

2 Required rate of return on equity is estimated by using CAPM. See details »

   Required rate of return on debt. See details »

   Required rate of return on debt is after tax.

   Estimated (average) effective income tax rate
= (21.00% + 21.00% + 21.00% + 9.60% + 7.60%) ÷ 5
= 16.04%

WACC = 8.71%

FCFF Growth Rate (g)

FCFF growth rate (g) implied by PRAT model

Pfizer Inc., PRAT model

Microsoft Excel
Average Dec 31, 2025 Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021
Selected Financial Data (US$ in millions)
Interest expense 2,671 3,091 2,209 1,238 1,291
Discontinued operations, net of tax 25 11 (14) 6 (434)
Net income attributable to Pfizer Inc. common shareholders 7,771 8,031 2,119 31,372 21,979
 
Effective income tax rate (EITR)1 21.00% 21.00% 21.00% 9.60% 7.60%
 
Interest expense, after tax2 2,110 2,442 1,745 1,119 1,193
Add: Cash dividends declared, common stock 9,779 9,577 9,316 9,037 8,816
Interest expense (after tax) and dividends 11,889 12,019 11,061 10,156 10,009
 
EBIT(1 – EITR)3 9,856 10,462 3,878 32,485 23,606
 
Short-term borrowings, including current portion of long-term debt 3,154 6,946 10,350 2,945 2,241
Long-term debt, excluding current portion 61,641 57,405 61,538 32,884 36,195
Total Pfizer Inc. shareholders’ equity 86,476 88,203 89,014 95,661 77,201
Total capital 151,271 152,554 160,902 131,490 115,637
Financial Ratios
Retention rate (RR)4 -0.21 -0.15 -1.85 0.69 0.58
Return on invested capital (ROIC)5 6.52% 6.86% 2.41% 24.71% 20.41%
Averages
RR -0.19
ROIC 12.18%
 
FCFF growth rate (g)6 -2.30%

Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).

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2025 Calculations

2 Interest expense, after tax = Interest expense × (1 – EITR)
= 2,671 × (1 – 21.00%)
= 2,110

3 EBIT(1 – EITR) = Net income attributable to Pfizer Inc. common shareholders – Discontinued operations, net of tax + Interest expense, after tax
= 7,771 – 25 + 2,110
= 9,856

4 RR = [EBIT(1 – EITR) – Interest expense (after tax) and dividends] ÷ EBIT(1 – EITR)
= [9,856 – 11,889] ÷ 9,856
= -0.21

5 ROIC = 100 × EBIT(1 – EITR) ÷ Total capital
= 100 × 9,856 ÷ 151,271
= 6.52%

6 g = RR × ROIC
= -0.19 × 12.18%
= -2.30%

FCFF growth rate (g) implied by single-stage model

g = 100 × (Total capital, fair value0 × WACC – FCFF0) ÷ (Total capital, fair value0 + FCFF0)
= 100 × (206,837 × 8.71% – 11,370) ÷ (206,837 + 11,370)
= 3.04%

where:

Total capital, fair value0 = current fair value of Pfizer Inc. debt and equity (US$ in millions)
FCFF0 = the last year Pfizer Inc. free cash flow to the firm (US$ in millions)
WACC = weighted average cost of Pfizer Inc. capital

FCFF growth rate (g) forecast

Pfizer Inc., H-model

Microsoft Excel
Year Value gt
1 g1 -2.30%
2 g2 -0.96%
3 g3 0.37%
4 g4 1.71%
5 and thereafter g5 3.04%

where:
g1 is implied by PRAT model
g5 is implied by single-stage model
g2, g3 and g4 are calculated using linear interpolation between g1 and g5

Calculations

g2 = g1 + (g5 – g1) × (2 – 1) ÷ (5 – 1)
= -2.30% + (3.04% – -2.30%) × (2 – 1) ÷ (5 – 1)
= -0.96%

g3 = g1 + (g5 – g1) × (3 – 1) ÷ (5 – 1)
= -2.30% + (3.04% – -2.30%) × (3 – 1) ÷ (5 – 1)
= 0.37%

g4 = g1 + (g5 – g1) × (4 – 1) ÷ (5 – 1)
= -2.30% + (3.04% – -2.30%) × (4 – 1) ÷ (5 – 1)
= 1.71%