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
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Solvency Ratios
- Enterprise Value (EV)
- Dividend Discount Model (DDM)
- Total Asset Turnover since 2005
- Price to Book Value (P/BV) since 2005
- Price to Sales (P/S) since 2005
- Analysis of Revenues
- Aggregate Accruals
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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
= – × =
The financial data exhibits significant fluctuations in both profitability and capital metrics over the examined periods.
- Net Operating Profit After Taxes (NOPAT)
- From 2020 to 2022, NOPAT demonstrated a strong upward trajectory, increasing from $6,095 million to $31,018 million. This suggests improving operating efficiency and profitability during this period. However, in 2023, there is a steep reversal with NOPAT turning negative to -$1,277 million, indicating operational losses or exceptional items impacting earnings. The year 2024 shows a partial recovery to $7,374 million, though this value remains considerably below the peak achieved in 2022.
- Cost of Capital
- The cost of capital rose modestly from 9.58% in 2020 to a peak of 10.24% in 2022, potentially reflecting increased financial risk or changes in market interest rates. Subsequently, the cost of capital declined to 8.82% in 2023 and slightly rose again to 8.98% in 2024, indicating a lowered or stabilized risk premium compared to earlier years.
- Invested Capital
- The invested capital declined initially from $103,898 million in 2020 to $87,670 million in 2021, perhaps due to asset disposals or capital efficiency improvements. Subsequently, it escalated sharply, reaching $154,882 million in 2023 before decreasing to $135,777 million in 2024. This volatility could reflect significant investments, acquisitions, or restructuring activities within the company.
- Economic Profit
- Economic profit, which considers the cost of capital, follows a similar trend to NOPAT, but the fluctuations are more pronounced. It was negative at -$3,855 million in 2020 but turned positive and grew substantially to $19,677 million by 2022, indicating value creation exceeding the cost of capital. However, 2023 saw a dramatic reversal to -$14,931 million, signaling substantial value destruction. The loss narrows slightly in 2024 to -$4,823 million, but it remains negative, suggesting ongoing challenges in generating returns above the cost of capital.
Overall, the data indicates a period of strong financial performance and growth until 2022, followed by a pronounced downturn in 2023 with partial recovery in 2024. The considerable volatility in both profitability and invested capital points to dynamic operational and strategic activities impacting financial outcomes during these years.
Net Operating Profit after Taxes (NOPAT)
Pfizer Inc., NOPAT calculation
US$ 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.
- Economic Profit
- The economic profit exhibited considerable volatility over the five-year period. Initially, the value was negative at -3,855 million US dollars in 2020 but turned strongly positive in 2021 and 2022, reaching 9,595 million and 19,677 million US dollars respectively. However, a significant reversal occurred in 2023, with economic profit declining sharply to -14,931 million US dollars, followed by a partial recovery to -4,823 million US dollars in 2024, though still remaining negative.
- Invested Capital
- Invested capital demonstrated an overall increasing trend from 2020 to 2024, with some fluctuations. Beginning at 103,898 million US dollars in 2020, it decreased moderately to 87,670 million US dollars in 2021, then increased substantially to 110,746 million in 2022 and further escalated to its peak of 154,882 million in 2023. In 2024, it decreased to 135,777 million US dollars but remained significantly higher than the initial 2020 figure.
- Economic Spread Ratio
- The economic spread ratio followed a pattern similar to economic profit, reflecting variability over the years. It was negative at -3.71% in 2020, shifted to positive territory at 10.94% in 2021, and improved further to 17.77% in 2022. The ratio then fell sharply into negative values at -9.64% in 2023 and improved yet remained negative at -3.55% in 2024.
- Summary Insights
- The data suggests that the entity experienced strong improvements in profitability and returns on invested capital during 2021 and 2022, as evidenced by positive and increasing economic profit and economic spread ratio levels. However, this positive trend was not sustained, with a notable decline in 2023, resulting in negative economic profit and spread ratio, signaling deteriorating economic performance despite the peak in invested capital. The partial recovery in economic profit and spread ratio in 2024 indicates some improvement but overall financial performance remained below optimal levels. The consistent increase in invested capital, especially the surge in 2023, did not translate into sustained profitability improvements, suggesting challenges in capital deployment efficiency or external factors affecting returns during those 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.
The financial data over the five-year period displays significant fluctuations in key indicators, highlighting periods of both growth and decline.
- Revenues
- Revenues showed a substantial increase from 42,678 million US dollars in 2020 to a peak of 101,175 million US dollars in 2022. Following this peak, revenues declined sharply to 59,553 million in 2023 but showed a mild recovery to 63,627 million in 2024. This pattern indicates rapid expansion until 2022, followed by a notable contraction and partial stabilization.
- Economic Profit
- The economic profit exhibited pronounced volatility. In 2020, it was negative at -3,855 million US dollars, shifting dramatically to positive territory with 9,595 million in 2021 and further increasing to 19,677 million in 2022. However, this upward trend reversed sharply, resulting in negative economic profit values of -14,931 million in 2023 and -4,823 million in 2024. This suggests strong profitability gains up to 2022, followed by a severe decline in economic value creation.
- Economic Profit Margin
- The economic profit margin mirrored the trend seen in economic profit. Negative at -9.03% in 2020, it improved substantially to 11.68% in 2021 and peaked at 19.45% in 2022, reflecting efficient value generation relative to revenues. Conversely, it deteriorated to -25.07% in 2023 and improved slightly to -7.58% in 2024, indicating losses relative to revenue during these periods.
Overall, the data portrays an initial phase of strong revenue growth and substantial improvement in economic profits up to the end of 2022. This was followed by a sharp decline in both revenues and economic profits in 2023, with a slight recovery in revenue but continued negative economic profitability in 2024. The trends suggest underlying challenges that emerged after 2022 affecting profitability despite some stabilization in sales.