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 Short-term (Operating) Activity Ratios
- Analysis of Long-term (Investment) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Capital Asset Pricing Model (CAPM)
- Return on Assets (ROA) since 2005
- Price to Earnings (P/E) since 2005
- Price to Book Value (P/BV) since 2005
- Analysis of Debt
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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 net operating profit after taxes shows a fluctuating trend over the observed period. Starting at 6,095 million USD in 2020, it significantly increased to 18,394 million USD in 2021 and further to 31,018 million USD in 2022. However, it experienced a sharp decline in 2023 to a negative value of -1,277 million USD, before recovering to 7,374 million USD in 2024. This indicates volatility, with a notable dip in 2023 impacting overall profitability.
- Cost of Capital
- The cost of capital has exhibited minor fluctuations but remained within a relatively narrow range. It increased slightly from 9.55% in 2020 to 10.21% in 2022, followed by a decrease to 8.79% in 2023 and a slight rebound to 8.96% in 2024. This suggests some variability in financing costs or risk perception but no dramatic shifts.
- Invested Capital
- Invested capital showed a general upward trend with some variability. It decreased from 103,898 million USD in 2020 to 87,670 million USD in 2021, then increased substantially to 110,746 million USD in 2022 and 154,882 million USD in 2023, before slightly declining to 135,777 million USD in 2024. The increase in capital invested in 2023 was notable and coincides with the period of negative NOPAT, possibly indicating increased investment without immediate profit returns.
- Economic Profit
- Economic profit data reveals considerable volatility. Starting at a negative 3,827 million USD in 2020, it improved dramatically to positive values of 9,621 million USD in 2021 and 19,710 million USD in 2022. However, it sharply reversed to a negative 14,894 million USD in 2023 and improved slightly but remained negative at -4,790 million USD in 2024. This pattern highlights significant losses in value creation in the latter years despite earlier strong performance.
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 shows significant volatility over the observed period. It moved from a negative value of -3,827 million US dollars in 2020 to a positive and increasing trend peaking at 19,710 million US dollars in 2022. However, this positive trajectory reversed sharply in 2023, falling to -14,894 million US dollars, followed by a moderate recovery in 2024 to -4,790 million US dollars. The fluctuation indicates substantial changes in profitability, with the peak in 2022 followed by notable declines in subsequent years.
- Invested Capital
- Invested capital fluctuated over the years, starting at 103,898 million US dollars in 2020, then decreasing to 87,670 million in 2021. It increased significantly in 2022 to 110,746 million and continued to rise substantially to 154,882 million in 2023. In 2024, the invested capital slightly decreased to 135,777 million. Overall, despite some variation, there is a general upward trend in invested capital, indicating increased asset or resource allocation especially in the years 2022 and 2023.
- Economic Spread Ratio
- The economic spread ratio exhibits a pattern similar to economic profit. Beginning with a negative value of -3.68% in 2020, it improved markedly to 10.97% in 2021 and further to 17.8% in 2022. However, the ratio dropped sharply to -9.62% in 2023 and improved slightly to -3.53% in 2024. This ratio's changes align with economic profit trends, reflecting profitability efficiency relative to invested capital, with strong positive spreads in 2021 and 2022 followed by deterioration in the last two 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 from the periods analyzed reveal notable fluctuations across key performance indicators, with significant volatility in economic profit and corresponding margins despite overall growth in revenues.
- Revenues
- Revenues demonstrated a strong upward trend from 2020 through 2022, increasing from approximately 42.7 billion US dollars in 2020 to over 101 billion US dollars in 2022. However, this growth was not sustained as revenues dropped substantially in 2023 to just under 60 billion US dollars, followed by a moderate recovery in 2024 to around 63.6 billion US dollars. This indicates an inconsistent revenue stream with a peak in 2022 and subsequent decline.
- Economic Profit
- Economic profit showed marked volatility over the examined years. Starting with a negative value of approximately -3.8 billion US dollars in 2020, the company reversed to strong positive economic profits in 2021 and 2022, reaching a peak of nearly 19.7 billion US dollars in 2022. However, this improvement was short-lived as economic profit declined sharply to -14.9 billion US dollars in 2023 and improved slightly to -4.8 billion US dollars in 2024, though still remaining negative. These swings suggest fluctuating operational efficiency or changes in cost structure relative to profitability.
- Economic Profit Margin
- The economic profit margin mirrored the trajectory of economic profit closely, illustrating profit relative to revenues. The margin was negative at -8.97% in 2020, improved to a positive 19.48% by 2022, indicating enhanced profitability relative to revenue. Subsequently, the margin reversed sharply to -25.01% in 2023, reflecting the heavy losses during that year, and moved to a lesser but still negative -7.53% in 2024. This pattern reinforces the observation of significant profitability challenges despite substantial revenue generation.
Overall, the trends suggest that while revenue growth was strong initially, the company experienced severe profitability challenges in the latter years, as evidenced by negative economic profits and margins. The decline in economic profit and margin in 2023 was particularly pronounced, implying potential structural or market pressures affecting financial performance. Although there was some recovery in 2024, the continued negative economic profit margin indicates that profitability issues persisted. These metrics underscore the importance of examining cost management and efficiency factors alongside revenue trends to understand the underlying financial dynamics fully.