If you had bought $1,000 worth of Pfizer(NYSE: PFE) shares five years ago, how much would that be worth today? The answer will strike you as terrific or terrible: $840.
That answer will be terrible if you did buy into Pfizer then as it reflects a loss, not a gain -- of about 16% -- yikes! Annualized, that's an average loss of 3.4% per year. The loss is even worse if you did what we often recommend doing: reinvesting your dividends into additional shares of stock. If you plowed Pfizer's not-insignificant dividends into more shares of Pfizer, your overall loss would have been 21%, leaving you with about $790. Ouch. (Note that, of course, you can always reinvest dividend income into shares of any stock, such as one you're most bullish on.)
Meanwhile, that answer -- a loss of 16% or 21% -- could be terrific if you didn't buy into Pfizer in 2019 but want to do so now. That's because the stock, after such a drop, now looks quite attractively valued. Its recent price-to-sales ratio, for example, was 2.5, well below the five-year average of 3.4. On top of that, Pfizer is a dividend-paying stock, with a whopping recent dividend yield of 6.5%.
The stock has sunk in part because demand has fallen for Pfizer's Covid-19 vaccines and its Paxlovid drug, and also because some of its big sellers, such as Eliquis, Ibrance, Inlyta, Xeljanz, Xtandi, and Vyndaqel, are coming off patent protection in the next few years.
But Pfizer, like any good pharmaceutical company, is always working on the next big sellers. It has strengthened its cancer-fighting game by acquiring Seagen, whose cancer treatments could help drive growth. And Pfizer's overall pipeline recently featured more than 110 medicines and vaccines in development, some of which may turn out to be tomorrow's blockbusters.
More important than how Pfizer has done in the past is how it will perform in the future. Whether you own it already or are thinking of buying, you want to be confident it'll be bigger and stronger in the future.
Should you invest $1,000 in Pfizer right now?
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Selena Maranjian has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Pfizer. The Motley Fool has a disclosure policy.
