Economic Value Added (EVA)
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Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.
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Pfizer Inc. pages available for free this week:
- Statement of Comprehensive Income
- Balance Sheet: Assets
- Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Long-term (Investment) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Enterprise Value to FCFF (EV/FCFF)
- Price to FCFE (P/FCFE)
- Present Value of Free Cash Flow to Equity (FCFE)
- Return on Assets (ROA) since 2005
- Price to Sales (P/S) since 2005
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Economic Profit
Pfizer Inc., economic profit calculation
US$ in millions
| 12 months ended: | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
Based on: 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), 10-K (reporting date: 2020-12-31).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2024 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= – × =
- Net Operating Profit After Taxes (NOPAT)
- The NOPAT demonstrated a strong upward trend from 2020 to 2022, increasing significantly from 6,095 million USD in 2020 to 31,018 million USD in 2022. However, this positive trajectory was interrupted in 2023 when NOPAT turned negative at -1,277 million USD. In 2024, there was a recovery to 7,374 million USD, though this level remained well below the peak observed in 2022.
- Cost of Capital
- The cost of capital fluctuated modestly over the analyzed period, rising from 9.46% in 2020 to 10.11% in 2022. Subsequently, it decreased to 8.72% in 2023 before slightly increasing again to 8.88% in 2024. This suggests some variability in financing costs or risk perceptions across the years, with the lowest cost of capital observed in 2023.
- Invested Capital
- Invested capital experienced a decline from 103,898 million USD in 2020 to 87,670 million USD in 2021, followed by an increase to 110,746 million USD in 2022. Afterward, there was a substantial rise to 154,882 million USD in 2023, the highest level in the period, before a reduction to 135,777 million USD in 2024. This pattern indicates variability in capital allocation and investment strategies, with a notable expansion in 2023.
- Economic Profit
- Economic profit showed an initial negative value of -3,735 million USD in 2020, improving markedly to positive figures of 9,704 million USD in 2021 and 19,817 million USD in 2022, signaling strong value creation during these years. However, economic profit plummeted to -14,778 million USD in 2023, reflecting a sharp deterioration in value generation, likely linked to the negative NOPAT that year. Although improving in 2024 to -4,684 million USD, economic profit remained negative, indicating ongoing challenges in generating returns above the cost of capital.
Net Operating Profit after Taxes (NOPAT)
Pfizer Inc., NOPAT calculation
US$ in millions
Based on: 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), 10-K (reporting date: 2020-12-31).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowance for doubtful accounts.
3 Addition of increase (decrease) in restructuring accruals.
4 Addition of increase (decrease) in equity equivalents to net income attributable to Pfizer Inc. common shareholders.
5 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
6 2024 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =
7 Addition of after taxes interest expense to net income attributable to Pfizer Inc. common shareholders.
8 2024 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 21.00% =
9 Elimination of after taxes investment income.
10 Elimination of discontinued operations.
The financial data reveals notable fluctuations in profitability measures over the five-year period under review. Both net income attributable to common shareholders and net operating profit after taxes (NOPAT) exhibit significant variability, indicating shifts in operational efficiency and overall financial performance.
- Net Income Attributable to Pfizer Inc. Common Shareholders
- The net income increased substantially from 9,616 million USD in 2020 to a peak of 31,372 million USD in 2022. This growth signals a period of heightened profitability. However, the figure declined sharply to 2,119 million USD in 2023, representing a significant downturn. The net income rebounded in 2024 to 8,031 million USD, yet remained well below the peak levels observed in 2021 and 2022.
- Net Operating Profit After Taxes (NOPAT)
- The NOPAT followed a similar trajectory as net income. It rose from 6,095 million USD in 2020 to a maximum of 31,018 million USD in 2022, demonstrating improved operational performance and effective tax management during this period. In 2023, NOPAT turned negative to -1,277 million USD, reflecting operational challenges and possibly extraordinary items impacting profitability. The measure recovered moderately in 2024, reaching 7,374 million USD, yet still significantly lower compared to the peak years.
Overall, the data indicates a strong growth trend in profitability through 2022, followed by a pronounced decline in 2023, and a partial recovery in 2024. The volatile pattern suggests the presence of external or internal factors causing fluctuations in earnings and operating profitability, which could merit further investigation to understand the underlying drivers and sustainability of recent earnings levels.
Cash Operating Taxes
Pfizer Inc., cash operating taxes calculation
US$ in millions
Based on: 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), 10-K (reporting date: 2020-12-31).
- Provision (benefit) for taxes on income
- The provision for taxes on income demonstrated significant volatility over the observed periods. Initially, it increased notably from 477 million USD in 2020 to a peak of 3,328 million USD in 2022. Subsequently, it shifted to a negative value, indicating a tax benefit, with -1,115 million USD recorded in 2023, followed by a marginal negative provision of -28 million USD in 2024. This pattern suggests a possible influence of tax credits, adjustments, or one-time events impacting the effective tax expense.
- Cash operating taxes
- Cash operating taxes exhibited a rising trend from 2,090 million USD in 2020 to a peak of 7,967 million USD in 2022. After reaching this high point, there was a pronounced decline to 2,113 million USD in 2023. The figure modestly increased again to 2,426 million USD in 2024. This fluctuation indicates variability in the company’s cash tax obligations, potentially reflecting changes in taxable income, tax planning strategies, or timing differences in tax payments.
Invested Capital
Pfizer Inc., invested capital calculation (financing approach)
US$ in millions
Based on: 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), 10-K (reporting date: 2020-12-31).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of allowance for doubtful accounts receivable.
4 Addition of restructuring accruals.
5 Addition of equity equivalents to total Pfizer Inc. shareholders’ equity.
6 Removal of accumulated other comprehensive income.
7 Subtraction of construction in progress.
8 Subtraction of marketable securities.
The data reveals significant fluctuations across the reported financial items over the five-year period from 2020 to 2024.
- Total reported debt & leases
-
This figure remained relatively stable between 2020 and 2022, with values around 41,000 million US dollars. However, it increased substantially in 2023 to over 75,000 million US dollars, representing almost a doubling compared to the previous year. In 2024, there was a decrease to approximately 67,000 million US dollars, though this figure remained markedly higher than the levels seen from 2020 to 2022.
- Total Pfizer Inc. shareholders’ equity
-
Shareholders’ equity exhibited a generally increasing trend from 63,238 million US dollars in 2020, rising steadily to a peak of 95,661 million US dollars in 2022. Following this apex, the equity declined moderately in the succeeding two years, reaching 88,203 million US dollars by the end of 2024. Despite the decrease post-2022, the equity values in 2023 and 2024 remained higher than the initial 2020 level.
- Invested capital
-
Invested capital presents a more volatile trend. Starting at 103,898 million US dollars in 2020, it decreased to 87,670 million US dollars in 2021, indicating a contraction. This was followed by a substantial increase in 2022 to 110,746 million US dollars and an even sharper rise in 2023 to 154,882 million US dollars. By 2024, invested capital receded to 135,777 million US dollars but remained significantly above the 2020 level.
Overall, the data highlights a phase of increased leverage in 2023, as reflected by the sharp rise in total reported debt and leases, coupled with a significant buildup of invested capital during the same period. Shareholders’ equity expanded robustly through 2022, peaking before experiencing moderate declines, suggesting possible distribution of earnings or adjustments in retained earnings. The trends indicate dynamic financial management actions influencing capital structure and investment intensity, especially from 2022 through 2024.
Cost of Capital
Pfizer Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2024-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2023-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2020-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Pfizer Inc., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| AbbVie Inc. | ||||||
| Amgen Inc. | ||||||
| Bristol-Myers Squibb Co. | ||||||
| Danaher Corp. | ||||||
| Eli Lilly & Co. | ||||||
| Gilead Sciences Inc. | ||||||
| Johnson & Johnson | ||||||
| Merck & Co. Inc. | ||||||
| Regeneron Pharmaceuticals Inc. | ||||||
| Thermo Fisher Scientific Inc. | ||||||
| Vertex Pharmaceuticals Inc. | ||||||
Based on: 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), 10-K (reporting date: 2020-12-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2024 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
The financial data indicates significant volatility in the economic profit achieved over the observed periods. Initially, economic profit was negative in 2020, standing at -3735 million US dollars, which then increased sharply to positive values in 2021 and 2022, reaching 9704 million and 19817 million US dollars respectively. However, this upward trend reversed in 2023 and 2024, with economic profit declining to -14778 million and -4684 million US dollars, indicating periods of economic loss in these latter years.
Regarding invested capital, the trend fluctuates considerably over the periods. Invested capital decreased from 103898 million US dollars in 2020 to 87670 million US dollars in 2021, then increased markedly to 110746 million in 2022, further rising to 154882 million in 2023 before tapering to 135777 million US dollars in 2024. The variations suggest shifts in capital allocation, investments, or asset base which could be influencing the profitability dynamics observed.
The economic spread ratio, representing the return on invested capital relative to its cost, displays notable changes consistent with economic profit variations. It was negative at -3.6% in 2020, turning substantially positive in 2021 and 2022 with 11.07% and 17.89% respectively, indicating enhanced value creation during these years. The ratio then reversed to negative in 2023 and 2024, at -9.54% and -3.45%, corresponding with economic profit losses and suggesting that the returns generated did not cover the cost of capital during these periods.
Overall, the data exhibits a cyclical pattern of economic profitability, with a peak in 2022 followed by a downturn in subsequent years. The invested capital shows an increasing trend in the mid-period before decreasing slightly, which might be impacting economic returns. The movement in economic spread ratio corroborates the profit trend, highlighting periods when capital was effectively employed versus times when it was not. This mixed pattern reflects operational challenges or external factors influencing financial performance across the analyzed years.
Economic Profit Margin
Pfizer Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Revenues | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| AbbVie Inc. | ||||||
| Amgen Inc. | ||||||
| Bristol-Myers Squibb Co. | ||||||
| Danaher Corp. | ||||||
| Eli Lilly & Co. | ||||||
| Gilead Sciences Inc. | ||||||
| Johnson & Johnson | ||||||
| Merck & Co. Inc. | ||||||
| Regeneron Pharmaceuticals Inc. | ||||||
| Thermo Fisher Scientific Inc. | ||||||
| Vertex Pharmaceuticals Inc. | ||||||
Based on: 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), 10-K (reporting date: 2020-12-31).
1 Economic profit. See details »
2 2024 Calculation
Economic profit margin = 100 × Economic profit ÷ Revenues
= 100 × ÷ =
3 Click competitor name to see calculations.
- Revenues
- Revenues exhibited a significant increase from 42,678 million US dollars in 2020 to 101,175 million US dollars in 2022, effectively more than doubling over this two-year period. However, this upward trend reversed earnestly in the subsequent years, with revenues declining sharply to 59,553 million US dollars in 2023 before recovering slightly to 63,627 million US dollars in 2024. Despite this partial recovery, the revenue levels in the final year remained substantially below the peak observed in 2022.
- Economic Profit
- The economic profit showed considerable volatility throughout the observed period. Starting with a sizable negative figure of -3,735 million US dollars in 2020, the company experienced a dramatic turnaround in 2021, reporting a positive economic profit of 9,704 million US dollars. This upward trajectory continued strongly into 2022 when economic profit nearly doubled to 19,817 million US dollars. Contrarily, economic profit plunged to -14,778 million US dollars in 2023, followed by a reduction in the magnitude of the loss to -4,684 million US dollars in 2024. This pattern indicates significant fluctuations in profitability, with short-term gains not sustained in the longer term.
- Economic Profit Margin
- The economic profit margin mirrored the volatility seen in the economic profit figures. Negative margin values of -8.75% in 2020 turned positive in 2021 at 11.81%, and further increased to 19.59% in 2022, reflecting improved profitability relative to revenues. However, this trend reversed sharply in 2023 when the margin dropped to a negative -24.81%, highlighting a substantial decrease in profitability efficiency. By 2024, there was a modest recovery in margin to -7.36%, though it remained negative and below previous positive levels.
- Overall Insights
- The data reveals a period of strong growth and profitability from 2020 through 2022, characterized by rising revenues and increasing positive economic profits and margins. However, this positive trend was not sustained, as 2023 marked a severe downturn with significant declines in revenues, economic profit, and profitability margins. While 2024 showed signs of partial recovery in revenues and economic profit, financial performance was still below the levels achieved during the peak years. These fluctuations point to underlying challenges impacting profitability despite initial revenue growth.