Microsoft Excel LibreOffice Calc

Pfizer Inc. (PFE)

Enterprise Value to FCFF (EV/FCFF)

Difficulty: Intermediate

Free Cash Flow to The Firm (FCFF)

Pfizer Inc., FCFF calculation

US$ in millions

Microsoft Excel LibreOffice Calc
12 months ended Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Net income attributable to Pfizer Inc. 11,153  21,308  7,215  6,960  9,135 
Net income attributable to noncontrolling interests 35  47  31  26  33 
Net noncash charges 5,565  (6,181) 8,570  6,962  6,292 
Changes in assets and liabilities, net of acquisitions and divestitures (926) 1,296  85  564  1,423 
Net cash provided by operating activities 15,827  16,470  15,901  14,512  16,883 
Cash paid during the period for interest, net of tax1 1,168  1,319  1,257  1,013  1,155 
Capitalized interest expense, net of tax2 65  63  53  25  31 
Purchases of property, plant and equipment (2,042) (1,956) (1,823) (1,397) (1,199)
Acquisitions of intangible assets (154) (261) (176) (99) (384)
Free cash flow to the firm (FCFF) 14,864  15,635  15,211  14,054  16,485 

Based on: 10-K (filing date: 2019-02-28), 10-K (filing date: 2018-02-22), 10-K (filing date: 2017-02-23), 10-K (filing date: 2016-02-29), 10-K (filing date: 2015-02-27).

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Item Description The company
FCFF Free cash flow to the firm is the cash flow available to the Pfizer Inc.’s suppliers of capital after all operating expenses have been paid and necessary investments in working and fixed capital have been made. Pfizer Inc.’s FCFF increased from 2016 to 2017 but then declined significantly from 2017 to 2018.

Interest Paid, Net of Tax

Pfizer Inc., interest paid, net of tax calculation

US$ in millions

Microsoft Excel LibreOffice Calc
12 months ended Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Effective Income Tax Rate (EITR)
EITR1 10.90% 13.10% 13.40% 22.20% 25.50%
Interest Paid, Net of Tax
Cash paid during the period for interest, before tax 1,311  1,518  1,451  1,302  1,550 
Less: Cash paid during the period for interest, tax2 143  199  194  289  395 
Cash paid during the period for interest, net of tax 1,168  1,319  1,257  1,013  1,155 
Interest Costs Capitalized, Net of Tax
Capitalized interest expense, before tax 73  72  61  32  41 
Less: Capitalized interest expense, tax3 8  9  8  7  10 
Capitalized interest expense, net of tax 65  63  53  25  31 

Based on: 10-K (filing date: 2019-02-28), 10-K (filing date: 2018-02-22), 10-K (filing date: 2017-02-23), 10-K (filing date: 2016-02-29), 10-K (filing date: 2015-02-27).

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2 2018 Calculation
Cash paid during the period for interest, tax = Cash paid during the period for interest × EITR
= 1,311 × 10.90% = 143

3 2018 Calculation
Capitalized interest expense, tax = Capitalized interest expense × EITR
= 73 × 10.90% = 8

Enterprise Value to FCFF Ratio, Current

Pfizer Inc., current EV/FCFF calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Selected Financial Data (US$ in millions)
Enterprise value (EV) 224,275 
Free cash flow to the firm (FCFF) 14,864 
Valuation Ratio
EV/FCFF 15.09
Benchmarks
EV/FCFF, Competitors1
Abbott Laboratories 28.38
AbbVie Inc. 10.04
Allergan PLC 12.71
Amgen Inc. 10.67
Biogen Inc. 7.87
Bristol-Myers Squibb Co. 16.04
Celgene Corp. 15.85
Eli Lilly & Co. 24.34
Gilead Sciences Inc. 9.74
Johnson & Johnson 18.94
Merck & Co. Inc. 26.18
Regeneron Pharmaceuticals Inc. 16.80
EV/FCFF, Sector
Pharmaceuticals & Biotechnology 15.80
EV/FCFF, Industry
Health Care 17.98

Based on: 10-K (filing date: 2019-02-28).

1 Click competitor name to see calculations.

If the company EV/FCFF is lower then the EV/FCFF of benchmark then company is relatively undervalued.
Otherwise, if the company EV/FCFF is higher then the EV/FCFF of benchmark then company is relatively overvalued.

Enterprise Value to FCFF Ratio, Historical

Pfizer Inc., historical EV/FCFF calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Selected Financial Data (US$ in millions)
Enterprise value (EV)1 263,948  236,623  227,277  199,475  211,252 
Free cash flow to the firm (FCFF)2 14,864  15,635  15,211  14,054  16,485 
Valuation Ratio
EV/FCFF3 17.76 15.13 14.94 14.19 12.81
Benchmarks
EV/FCFF, Competitors4
Abbott Laboratories 26.46 23.86 36.35 30.00 27.54
AbbVie Inc. 10.51 20.93 17.64 14.93 32.10
Allergan PLC 11.11 14.68 69.00 36.43 39.81
Amgen Inc. 10.31 10.37 11.32 11.85 13.77
Biogen Inc. 12.05 26.28 14.61 20.11 34.00
Bristol-Myers Squibb Co. 15.74 24.15 51.76 87.88 35.51
Celgene Corp. 14.27 13.72 23.00 35.79 34.75
Eli Lilly & Co. 29.26 19.17 23.22 43.88 24.69
Gilead Sciences Inc. 9.80 9.38 6.44 6.51 12.63
Johnson & Johnson 19.27 19.67 19.65 16.62 17.44
Merck & Co. Inc. 25.27 31.98 20.51 13.16 24.11
Regeneron Pharmaceuticals Inc. 23.09 32.47 38.99 57.44 97.24
EV/FCFF, Sector
Pharmaceuticals & Biotechnology 16.40 18.02 17.51 16.60 20.04
EV/FCFF, Industry
Health Care 18.26 19.22 18.59 17.46 19.65

Based on: 10-K (filing date: 2019-02-28), 10-K (filing date: 2018-02-22), 10-K (filing date: 2017-02-23), 10-K (filing date: 2016-02-29), 10-K (filing date: 2015-02-27).

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2 See details »

3 2018 Calculation
EV/FCFF = EV ÷ FCFF
= 263,948 ÷ 14,864 = 17.76

4 Click competitor name to see calculations.

Valuation ratio Description The company
EV/FCFF Enterprise value to free cash flow to the firm is whole company valuation indicator. Pfizer Inc.’s EV/FCFF ratio increased from 2016 to 2017 and from 2017 to 2018.