According to most health care professionals, Pfizer Inc.'s (PFE, Financial) Covid-19 vaccine has proven to be effective, and the stock has gained by nearly 25% over the past year as a consequence.
The stock traded up highly today after the biotech company announced its antiviral pill provides 89% effectiveness against the risk of hospitalization or death.
Value drivers
Obviously, the company was going to gain value after it started rolling out its vaccine, which has resulted in revenue growing by 59.83% year over year and operating income increasing 159.42% over the same period.
Pfizer, however, started from a solid base where it was already experiencing operating cash flow growth rates of 17.93% before the start of the pandemic through selling a range of drugs and services.
Moving forward, it doesn't seem as though Covid revenue streams will slow down anytime soon. Booster shots and an antiviral pill, along with its other 29 key drugs, should provide sustainable revenue in the long term.
Valuation
Pfizer's pro-forma price-earnings ratio trades at a 12.50% discount to its five-year average, which indicates value is in abundance. Looking at the statistic out of isolation, it should be noted the company also has a PEG ratio of 0.26, indicating its growth is outpacing the increase in stock price.
Lastly, Pfizer's forward price-sales ratio trades at a 23.76% discount to its five-year average, while its diluted earnings per share are anticipated to grow by an additional 9.72% over the next year, which is 102.93% higher than its five-year average.
This means the stock hasn't priced sales in just yet, and earnings are anticipated to remain robust over the next year while shareholder dilution is unlikely.
Momentum
Pfizer also brings good momentum with it; it's a popular stock due to obvious event-driven reasons. The stock's trading above its 10-, 100- and 200-day moving averages, suggesting that a momentum play is definitely on the cards.
The stock's relative strength index of 59 is also still well below the overbought threshold of 70, meaning it still has plenty of room to run before investors have to start worrying about becoming bagholders.
Final word
Many may be wondering whether it's too late to invest in Pfizer, but business fundamentals and key metrics suggest it's not. The stock remains undervalued and there is still quite some time before all the good stuff is fully priced in.
