Pfizer Inc. (NYSE:PFE)

The analysis of the financial performance over the five-year period reveals several significant trends and fluctuations. Net operating profit after taxes (NOPAT) experienced strong growth from 2020 through 2022, increasing markedly from $6,095 million in 2020 to a peak of $31,018 million in 2022. However, this upward trend was interrupted in 2023 with a sharp decline to a negative value of -$1,277 million, followed by a recovery to $7,374 million in 2024, although this latter figure remains substantially below the earlier peak.

The cost of capital has remained relatively stable throughout the period, ranging narrowly between 8.77% and 10.18%. This suggests a consistent capital structure or risk profile, with a slight decrease observed in 2023 and a minor increase again in 2024.

Invested capital displayed a generally upward trajectory, growing from $103,898 million in 2020 to $154,882 million in 2023, before contracting to $135,777 million in 2024. The growth in invested capital outpaced some of the growth in NOPAT, especially in the years leading to 2023, which could indicate increased investment or expansion activities.

Economic profit shows a pattern aligned with the fluctuations in NOPAT, being negative at -$3,797 million in 2020, turning positive and increasing significantly in 2021 and 2022 to $9,648 million and $19,745 million respectively. This positive momentum reversed dramatically in 2023, reaching a severe negative value of -$14,857 million, with a partial recovery in 2024 to -$4,756 million. The negative economic profit in 2023 and 2024 implies that the returns generated did not cover the cost of capital during these years, indicating value destruction despite the absolute increase in net operating profits in 2024 compared to 2023.

Overall, the data illustrates a period of strong financial performance peaking in 2022, followed by a considerable downturn in 2023 impacting profitability and value creation. The partial recovery in 2024 suggests some return to stability but does not reach the levels realized in the earlier years. The stability of the cost of capital amidst these changes reflects consistent external financing conditions, while the growth and subsequent reduction in invested capital highlight strategic adjustments in asset allocation or capital deployment over this timeframe.

Key Observations

Significant growth in NOPAT from 2020 to 2022, followed by a sharp decline in 2023 and partial recovery in 2024.

Relatively stable cost of capital, with minor fluctuations indicating consistent risk and capital structure.

Increasing invested capital through 2023, then a reduction in 2024, reflecting strategic shifts or changes in capital intensity.

Economic profit mirrors NOPAT trends but shows periods of value destruction in 2023 and 2024, suggesting that profitability was insufficient relative to capital costs during these years.

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.

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.

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.

Economic Profit

The economic profit exhibited significant fluctuations over the analyzed years. It started with a substantial negative value of -3,797 million US dollars and then sharply increased to positive figures in 2021 and 2022, reaching a peak of 19,745 million US dollars in 2022. However, this positive trend was not sustained, as the figure dropped again into negative territory in 2023 and 2024, with -14,857 million and -4,756 million US dollars respectively. This volatility indicates variability in the company's profitability after accounting for the cost of capital.

Invested Capital

The invested capital showed a fluctuating but generally upward trend between 2020 and 2024. It started at 103,898 million US dollars in 2020, decreased to 87,670 million US dollars in 2021, then increased consistently over the next two years, peaking at 154,882 million US dollars in 2023 before dipping to 135,777 million US dollars in 2024. This pattern suggests periods of disinvestment followed by significant reinvestment or growth, reflecting changes in the capital structure or asset base.

Economic Spread Ratio

The economic spread ratio mirrored the pattern of economic profit, showing notable variation over the years. Initially negative at -3.65% in 2020, it turned positive and improved substantially in 2021 and 2022, reaching 17.83% in 2022. Subsequently, it declined sharply to negative values again in 2023 (-9.59%) and slightly improved but remained negative in 2024 (-3.5%). These fluctuations indicate inconsistency in the returns generated over invested capital relative to the cost of capital, with strong performance in 2021 and 2022 followed by deteriorating returns in the subsequent years.