Intrinsic value of Pfizer - PFE

Previous Close

$37.33

  Intrinsic Value

$24.58

stock screener

  Rating & Target

sell

-34%

Previous close

$37.33

 
Intrinsic value

$24.58

 
Up/down potential

-34%

 
Rating

sell

We calculate the intrinsic value of PFE stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2017), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 222.9

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  53,597
  54,830
  56,239
  57,821
  59,574
  61,497
  63,591
  65,859
  68,301
  70,922
  73,726
  76,719
  79,905
  83,291
  86,883
  90,691
  94,721
  98,983
  103,487
  108,242
  113,259
  118,550
  124,128
  130,004
  136,193
  142,709
  149,568
  156,786
  164,379
  172,366
Variable operating expenses, $m
  44,919
  45,712
  46,617
  47,634
  48,761
  49,997
  51,343
  52,801
  54,370
  56,055
  47,388
  49,312
  51,359
  53,536
  55,845
  58,292
  60,883
  63,623
  66,517
  69,573
  72,798
  76,199
  79,784
  83,561
  87,539
  91,728
  96,136
  100,776
  105,656
  110,790
Fixed operating expenses, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  44,919
  45,712
  46,617
  47,634
  48,761
  49,997
  51,343
  52,801
  54,370
  56,055
  47,388
  49,312
  51,359
  53,536
  55,845
  58,292
  60,883
  63,623
  66,517
  69,573
  72,798
  76,199
  79,784
  83,561
  87,539
  91,728
  96,136
  100,776
  105,656
  110,790
Operating income, $m
  8,678
  9,118
  9,621
  10,187
  10,813
  11,500
  12,248
  13,058
  13,931
  14,867
  26,338
  27,407
  28,545
  29,755
  31,038
  32,398
  33,838
  35,361
  36,970
  38,668
  40,461
  42,351
  44,343
  46,443
  48,654
  50,982
  53,432
  56,010
  58,723
  61,576
EBITDA, $m
  31,335
  32,056
  32,879
  33,804
  34,829
  35,954
  37,178
  38,504
  39,932
  41,464
  43,103
  44,853
  46,715
  48,695
  50,796
  53,022
  55,378
  57,870
  60,503
  63,283
  66,216
  69,309
  72,570
  76,006
  79,624
  83,434
  87,444
  91,663
  96,103
  100,772
Interest expense (income), $m
  1,451
  2,349
  2,455
  2,582
  2,728
  2,891
  3,072
  3,271
  3,487
  3,721
  3,973
  4,244
  4,533
  4,842
  5,171
  5,521
  5,892
  6,285
  6,701
  7,141
  7,606
  8,096
  8,614
  9,161
  9,736
  10,343
  10,982
  11,655
  12,363
  13,108
  13,892
Earnings before tax, $m
  6,329
  6,663
  7,039
  7,459
  7,922
  8,428
  8,977
  9,571
  10,210
  10,894
  22,094
  22,874
  23,703
  24,584
  25,518
  26,507
  27,554
  28,660
  29,829
  31,063
  32,364
  33,737
  35,183
  36,706
  38,311
  40,000
  41,777
  43,647
  45,615
  47,684
Tax expense, $m
  1,709
  1,799
  1,901
  2,014
  2,139
  2,275
  2,424
  2,584
  2,757
  2,941
  5,965
  6,176
  6,400
  6,638
  6,890
  7,157
  7,439
  7,738
  8,054
  8,387
  8,738
  9,109
  9,499
  9,911
  10,344
  10,800
  11,280
  11,785
  12,316
  12,875
Net income, $m
  4,620
  4,864
  5,138
  5,445
  5,783
  6,152
  6,553
  6,987
  7,453
  7,952
  16,129
  16,698
  17,303
  17,946
  18,628
  19,350
  20,114
  20,922
  21,775
  22,676
  23,626
  24,628
  25,683
  26,796
  27,967
  29,200
  30,497
  31,863
  33,299
  34,809

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  175,153
  179,182
  183,787
  188,957
  194,685
  200,971
  207,815
  215,224
  223,206
  231,772
  240,936
  250,715
  261,126
  272,191
  283,933
  296,376
  309,547
  323,475
  338,193
  353,732
  370,128
  387,420
  405,646
  424,850
  445,076
  466,371
  488,785
  512,372
  537,186
  563,286
Adjusted assets (=assets-cash), $m
  175,153
  179,182
  183,787
  188,957
  194,685
  200,971
  207,815
  215,224
  223,206
  231,772
  240,936
  250,715
  261,126
  272,191
  283,933
  296,376
  309,547
  323,475
  338,193
  353,732
  370,128
  387,420
  405,646
  424,850
  445,076
  466,371
  488,785
  512,372
  537,186
  563,286
Revenue / Adjusted assets
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
  0.306
Average production assets, $m
  121,879
  124,683
  127,887
  131,484
  135,471
  139,844
  144,607
  149,762
  155,316
  161,277
  167,654
  174,458
  181,703
  189,403
  197,573
  206,231
  215,396
  225,088
  235,329
  246,142
  257,551
  269,584
  282,266
  295,629
  309,703
  324,521
  340,118
  356,531
  373,798
  391,959
Working capital, $m
  3,001
  3,070
  3,149
  3,238
  3,336
  3,444
  3,561
  3,688
  3,825
  3,972
  4,129
  4,296
  4,475
  4,664
  4,865
  5,079
  5,304
  5,543
  5,795
  6,062
  6,343
  6,639
  6,951
  7,280
  7,627
  7,992
  8,376
  8,780
  9,205
  9,652
Total debt, $m
  45,467
  47,823
  50,517
  53,542
  56,893
  60,570
  64,574
  68,908
  73,577
  78,589
  83,950
  89,670
  95,761
  102,234
  109,103
  116,382
  124,087
  132,235
  140,845
  149,935
  159,527
  169,642
  180,305
  191,539
  203,371
  215,829
  228,941
  242,740
  257,256
  272,524
Total liabilities, $m
  102,465
  104,821
  107,515
  110,540
  113,891
  117,568
  121,572
  125,906
  130,575
  135,587
  140,948
  146,668
  152,759
  159,232
  166,101
  173,380
  181,085
  189,233
  197,843
  206,933
  216,525
  226,640
  237,303
  248,537
  260,369
  272,827
  285,939
  299,738
  314,254
  329,522
Total equity, $m
  72,689
  74,360
  76,272
  78,417
  80,794
  83,403
  86,243
  89,318
  92,630
  96,185
  99,988
  104,047
  108,367
  112,959
  117,832
  122,996
  128,462
  134,242
  140,350
  146,799
  153,603
  160,779
  168,343
  176,313
  184,706
  193,544
  202,846
  212,634
  222,932
  233,764
Total liabilities and equity, $m
  175,154
  179,181
  183,787
  188,957
  194,685
  200,971
  207,815
  215,224
  223,205
  231,772
  240,936
  250,715
  261,126
  272,191
  283,933
  296,376
  309,547
  323,475
  338,193
  353,732
  370,128
  387,419
  405,646
  424,850
  445,075
  466,371
  488,785
  512,372
  537,186
  563,286
Debt-to-equity ratio
  0.630
  0.640
  0.660
  0.680
  0.700
  0.730
  0.750
  0.770
  0.790
  0.820
  0.840
  0.860
  0.880
  0.910
  0.930
  0.950
  0.970
  0.990
  1.000
  1.020
  1.040
  1.060
  1.070
  1.090
  1.100
  1.120
  1.130
  1.140
  1.150
  1.170
Adjusted equity ratio
  0.415
  0.415
  0.415
  0.415
  0.415
  0.415
  0.415
  0.415
  0.415
  0.415
  0.415
  0.415
  0.415
  0.415
  0.415
  0.415
  0.415
  0.415
  0.415
  0.415
  0.415
  0.415
  0.415
  0.415
  0.415
  0.415
  0.415
  0.415
  0.415
  0.415

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  4,620
  4,864
  5,138
  5,445
  5,783
  6,152
  6,553
  6,987
  7,453
  7,952
  16,129
  16,698
  17,303
  17,946
  18,628
  19,350
  20,114
  20,922
  21,775
  22,676
  23,626
  24,628
  25,683
  26,796
  27,967
  29,200
  30,497
  31,863
  33,299
  34,809
Depreciation, amort., depletion, $m
  22,657
  22,938
  23,258
  23,618
  24,016
  24,454
  24,930
  25,446
  26,001
  26,597
  16,765
  17,446
  18,170
  18,940
  19,757
  20,623
  21,540
  22,509
  23,533
  24,614
  25,755
  26,958
  28,227
  29,563
  30,970
  32,452
  34,012
  35,653
  37,380
  39,196
Funds from operations, $m
  27,278
  27,801
  28,396
  29,063
  29,799
  30,606
  31,483
  32,432
  33,454
  34,549
  32,894
  34,144
  35,473
  36,886
  38,385
  39,973
  41,654
  43,431
  45,308
  47,290
  49,381
  51,586
  53,910
  56,358
  58,937
  61,652
  64,509
  67,516
  70,679
  74,005
Change in working capital, $m
  59
  69
  79
  89
  98
  108
  117
  127
  137
  147
  157
  168
  178
  190
  201
  213
  226
  239
  252
  266
  281
  296
  312
  329
  347
  365
  384
  404
  425
  447
Cash from operations, $m
  27,219
  27,732
  28,318
  28,974
  29,701
  30,498
  31,366
  32,305
  33,317
  34,403
  32,737
  33,976
  35,295
  36,697
  38,184
  39,760
  41,428
  43,192
  45,056
  47,024
  49,100
  51,290
  53,598
  56,029
  58,590
  61,287
  64,125
  67,112
  70,253
  73,558
Maintenance CAPEX, $m
  -11,949
  -12,188
  -12,468
  -12,789
  -13,148
  -13,547
  -13,984
  -14,461
  -14,976
  -15,532
  -16,128
  -16,765
  -17,446
  -18,170
  -18,940
  -19,757
  -20,623
  -21,540
  -22,509
  -23,533
  -24,614
  -25,755
  -26,958
  -28,227
  -29,563
  -30,970
  -32,452
  -34,012
  -35,653
  -37,380
New CAPEX, $m
  -2,393
  -2,803
  -3,204
  -3,597
  -3,986
  -4,374
  -4,763
  -5,155
  -5,554
  -5,961
  -6,377
  -6,804
  -7,245
  -7,700
  -8,170
  -8,658
  -9,165
  -9,692
  -10,241
  -10,813
  -11,409
  -12,032
  -12,683
  -13,363
  -14,074
  -14,818
  -15,597
  -16,413
  -17,267
  -18,162
Cash from investing activities, $m
  -14,342
  -14,991
  -15,672
  -16,386
  -17,134
  -17,921
  -18,747
  -19,616
  -20,530
  -21,493
  -22,505
  -23,569
  -24,691
  -25,870
  -27,110
  -28,415
  -29,788
  -31,232
  -32,750
  -34,346
  -36,023
  -37,787
  -39,641
  -41,590
  -43,637
  -45,788
  -48,049
  -50,425
  -52,920
  -55,542
Free cash flow, $m
  12,877
  12,741
  12,645
  12,588
  12,566
  12,578
  12,619
  12,689
  12,787
  12,910
  10,233
  10,406
  10,604
  10,827
  11,073
  11,344
  11,640
  11,960
  12,306
  12,678
  13,077
  13,502
  13,957
  14,440
  14,954
  15,498
  16,076
  16,687
  17,334
  18,017
Issuance/(repayment) of debt, $m
  1,976
  2,357
  2,694
  3,024
  3,351
  3,677
  4,004
  4,334
  4,669
  5,011
  5,361
  5,720
  6,091
  6,473
  6,869
  7,279
  7,705
  8,148
  8,610
  9,090
  9,592
  10,115
  10,662
  11,234
  11,832
  12,458
  13,113
  13,798
  14,516
  15,269
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  1,976
  2,357
  2,694
  3,024
  3,351
  3,677
  4,004
  4,334
  4,669
  5,011
  5,361
  5,720
  6,091
  6,473
  6,869
  7,279
  7,705
  8,148
  8,610
  9,090
  9,592
  10,115
  10,662
  11,234
  11,832
  12,458
  13,113
  13,798
  14,516
  15,269
Total cash flow (excl. dividends), $m
  14,853
  15,098
  15,339
  15,612
  15,918
  16,255
  16,623
  17,024
  17,456
  17,922
  15,594
  16,127
  16,695
  17,300
  17,942
  18,623
  19,345
  20,109
  20,916
  21,768
  22,668
  23,618
  24,619
  25,674
  26,786
  27,956
  29,188
  30,485
  31,850
  33,285
Retained Cash Flow (-), $m
  -1,381
  -1,672
  -1,911
  -2,146
  -2,377
  -2,608
  -2,840
  -3,075
  -3,312
  -3,555
  -3,803
  -4,058
  -4,321
  -4,592
  -4,873
  -5,164
  -5,466
  -5,780
  -6,108
  -6,449
  -6,805
  -7,176
  -7,564
  -7,970
  -8,394
  -8,838
  -9,302
  -9,788
  -10,298
  -10,832
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  841
  858
  877
  900
  925
  953
  984
  1,017
  1,054
  1,093
  1,135
  1,180
  1,227
  1,278
  1,333
  1,390
  1,451
  1,516
  1,584
  1,656
  1,732
  1,812
  1,897
  1,986
  2,080
  2,179
  2,283
  2,393
  2,509
  2,630
Cash available for distribution, $m
  13,472
  13,426
  13,428
  13,467
  13,540
  13,646
  13,783
  13,949
  14,144
  14,367
  11,791
  12,069
  12,374
  12,708
  13,070
  13,460
  13,879
  14,328
  14,808
  15,320
  15,864
  16,442
  17,055
  17,705
  18,392
  19,119
  19,886
  20,697
  21,552
  22,454
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  12,917
  12,291
  11,686
  11,088
  10,495
  9,903
  9,311
  8,718
  8,125
  7,532
  5,599
  5,150
  4,705
  4,266
  3,837
  3,420
  3,020
  2,639
  2,280
  1,947
  1,641
  1,364
  1,118
  902
  715
  558
  427
  320
  235
  169
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Pfizer Inc. (Pfizer) is a research-based global biopharmaceutical company. The Company is engaged in the discovery, development and manufacture of healthcare products. Its global portfolio includes medicines and vaccines, as well as consumer healthcare products. The Company manages its commercial operations through two business segments: Pfizer Innovative Health (IH) and Pfizer Essential Health (EH). IH focuses on developing and commercializing medicines and vaccines, as well as products for consumer healthcare. IH therapeutic areas include internal medicine, vaccines, oncology, inflammation and immunology, rare diseases and consumer healthcare. EH includes legacy brands, branded generics, generic sterile injectable products, biosimilars and infusion systems. EH also includes a research and development (R&D) organization, as well as its contract manufacturing business. Its brands include Prevnar 13, Xeljanz, Eliquis, Lipitor, Celebrex, Pristiq and Viagra.

FINANCIAL RATIOS  of  Pfizer (PFE)

Valuation Ratios
P/E Ratio 31.4
Price to Sales 4.3
Price to Book 3.8
Price to Tangible Book
Price to Cash Flow 14.3
Price to Free Cash Flow 16.3
Growth Rates
Sales Growth Rate 8.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 33.6%
Cap. Spend. - 3 Yr. Gr. Rate 6.4%
Financial Strength
Quick Ratio 2
Current Ratio 0.2
LT Debt to Equity 52.7%
Total Debt to Equity 70.7%
Interest Coverage 7
Management Effectiveness
Return On Assets 5%
Ret/ On Assets - 3 Yr. Avg. 5.3%
Return On Total Capital 7%
Ret/ On T. Cap. - 3 Yr. Avg. 7.3%
Return On Equity 11.6%
Return On Equity - 3 Yr. Avg. 11.4%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 76.7%
Gross Margin - 3 Yr. Avg. 79.3%
EBITDA Margin 29.5%
EBITDA Margin - 3 Yr. Avg. 33.3%
Operating Margin 17%
Oper. Margin - 3 Yr. Avg. 21.3%
Pre-Tax Margin 15.8%
Pre-Tax Margin - 3 Yr. Avg. 19.6%
Net Profit Margin 13.7%
Net Profit Margin - 3 Yr. Avg. 15.4%
Effective Tax Rate 13.4%
Eff/ Tax Rate - 3 Yr. Avg. 20.4%
Payout Ratio 101.4%

PFE stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the PFE stock intrinsic value calculation we used $52546 million for the last fiscal year's total revenue generated by Pfizer. The default revenue input number comes from 2017 income statement of Pfizer. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our PFE stock valuation model: a) initial revenue growth rate of 2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for PFE is calculated based on our internal credit rating of Pfizer, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Pfizer.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of PFE stock the variable cost ratio is equal to 84.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for PFE stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for Pfizer.

Corporate tax rate of 27% is the nominal tax rate for Pfizer. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the PFE stock is equal to 1.6%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for PFE are equal to 227.4%.

Life of production assets of 10 years is the average useful life of capital assets used in Pfizer operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for PFE is equal to 5.6%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $71308 million for Pfizer - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 5970 million for Pfizer is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Pfizer at the current share price and the inputted number of shares is $222.9 billion.

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