Current market volatility demands that investors move toward stable and income-generating investment classes. The pharmaceutical industry scores high on the stability chart because it is cushioned by events related to the ongoing economic uncertainty thanks to the inelastic nature of demand for pharma products.
So, even fears around the COVID-19 virus have begun to abate, , many pharmaceutical companies are researching to target cures for other diseases. Furthermore, the pharmaceutical industry traditionally keeps investors on their toes with exciting news around, for example, clinical trials, vaccine and therapy developments, and acquisitions by larger players.
Pfizer, Inc. (PFE), Sanofi (SNY), Bayer AG (BAYRY), and Astellas Pharma Inc. (ALPMY) are not just fundamentally sound but are also attractive from a valuation perspective. They are trading far below their intrinsic values. Also, they offer consistent dividends, which are crucial in the current market environment. These companies’ dividend payouts indicate that they have strong cash flows and are operationally efficient. Hence, we think these stocks represent a winning combination of value and income.
Pfizer, Inc. (PFE)
PFE discovers, develops, manufactures, and sells healthcare products worldwide. Global Innovative Pharmaceutical (GIP); Global Vaccines, Oncology, and Consumer Healthcare (VOC); and Global Established Pharmaceutical (GEP) are the segments through which PFE operates.
PFE has been paying a quarterly dividend since 1987. On December 11, the company declared a dividend of $0.39, which cumulates to an annual dividend of $1.56 and yields 4.41%. The company’s five-year divided CAGR stands at 6.35%. Over the past six years, PFE has returned more capital to shareholders through dividend payouts than 98% of the dividend-paying U.S. stocks in the StockNews.com universe.
During the fourth quarter, ended December 31, PFE’s revenue increased 11% year-over-year to $11.7 billion, fueled by robust performances from Vyndaqel/Vyndamax, Eliquis, Oncology Biosimilars. Oncology and Rare diseases comprised the majority of PFE’s revenue for the quarter. Its EPS for the quarter was $0.10 compared to a loss per share of $0.06 posted in the same period last year.
Analysts expect PFE’s revenue for the quarter ending March 31to be $13.5 billion, representing a 12.7% year-over-year increase. Its EPS is expected to grow at the rate of 10% per annum over the next five years.
PFE has climbed 19.9% over the past year to close yesterday’s trading session at $35.61. The stock is currently undervalued. Its trailing ev/ebitda of 15.46x compares well to the industry average 20.89x.
It’s no surprise that PFE has an overall B rating, which equates to Buy in our POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.
PFE has a B grade for both Stability, Quality, and Value. In the B-rated, Medical - Pharmaceuticals industry, it is ranked #20 of 238 stocks.
In addition to the POWR Rating grades we’ve just highlighted, you can see the PFE ratings for Growth, Momentum, and Sentiment.
Sanofi - ADR (SNY)
SNY is a French pharmaceutical company that researches, develops, manufactures, and markets various therapeutic solutions. Pharmaceuticals, Vaccines, and Animal Health are the three segments through which the company operates.
SNY began paying dividends in 2003. The company declared a dividend of $1.70 per share on March 5. The dividend culminates to an annual dividend of $1.17 and a yield of 2.41%. SNY has a payout ratio of 19.6%. SNY has generated more cash flow over the 12 months than 93.8% of the U.S. dividend stocks in the stockNews.com universe.
SNY’s revenue for the fourth quarter ended December 31, 2020 declined 2.4% year-over-year to Euro 9.3 billion. However, its vaccine-related revenue rose 8% over the year to Euro 2 billion, as differentiated influenza vaccines saw strong demand and PPH grew consistently. Dupixent was the only product that witnessed strong growth during the quarter. The company also stated that it would help PFE and BioNTech to manufacture 125 million doses of their COVID-19 vaccine.
Analysts expect SNY’s revenue for the quarter ending March 31, 2021 to be $10.2 billion, representing a 3.5% year-over-year rise. Its EPS is expected to grow at the rate of 7.5% per annum over the next five years.
SNY ended yesterday's trading session at $48.55, rising 20.8% over the past year. SNY is an appealing value stock. Its trailing ev/sales of 2.91x compares to the industry average8.74x.
Due to its bright prospects, SNY has an overall B rating, which translates to a Buy in our POWR Rating system. SNY has a Stability and Value Grade of A. In the Medical - Pharmaceuticals industry, it is ranked #28.
Click here to see the additional POWR Ratings for SNY (Growth, Sentiment, Quality, and Momentum).
Bayer AG (BAYRY)
BAYRY is a Germany-based life science company that operates through its Pharmaceuticals, Consumer Health, and Crop Science segments globally.
The company has been paying dividends since 2014. BAYRY has declared a cash dividend of $0.53 per share, payable on April 14. This cumulates to an annual dividend of $0.53 and yields 3.35%. BAYRY has a payout ratio of 29.9%. The company’s 10-year dividend CAGR stands at 5.2%.
BAYRY’s group revenue for the third quarter, ended September 30, 2020, declined 5.1% year-over-year to Euro 8.5 billion. Its ebitda before special items tumbled 21.4% over the year to Euro 1.8 billion. Its core earnings per share declined by 30.2% year-over-year to Euro 0.81. Its Crop Science business was heavily impacted by seasonal and currency effects, while its Pharmaceuticals business has been recovering. The Consumer Health segment also demonstrated strong performance.
Analysts expect BAYRY’s revenue for the year ending December 31, 2021 to be $49.8 billion, representing a 0.2% year-over-year rise.
BAYRY has gained 7.9% over the year to end yesterday’s trading session at $15.82. The stock is also quite undervalued at present. It has a forward ev/ebitda of 7.76x versus the industry average 16.80x.
BAYRY’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our POWR Ratings system. BAYRY has a Growth Grade of A, and a Value and Stability grade of B. In the Medical - Pharmaceuticals industry, it is ranked #31.
To see additional POWR Ratings for Momentum, Sentiment, and Quality for BAYRY, Click here.
Astellas Pharma Inc. (ALPMY)
ALPMY is a Japanese manufacturer and importer of pharmaceutical products. XTANDI, an androgen receptor signaling inhibitor for the treatment of prostate cancer, and XOSPATA, an FLT3 inhibitor for adult patients with relapsed or refractory acute myeloid leukemia with an FLT3 mutation-positive, are its key offerings.
ALPMY has been consistently paying quarterly dividends since 2013. It recently declared a dividend of $0.19, which cumulates to an annual dividend of $0.29 and yields 1.79%. Its latest dividend represents a 5.1% increase versus its prior dividend. The company’s three-year and five-year divided CAGRs stand at 7.3% and 8,3%, respectively.
During the first nine months, ended January 29, 2021, ALPMY’s revenue declined 4.8% year-over-year to JPY 940 billion. Its EPS for the quarter declined to JPY 89.71 from JPY 101.93 posted in the prior year period. The company witnessed strong demand in XTANDI for the treatment of prostate cancer and XOSPATA for the treatment of acute myeloid leukemia.
APLMY ended yesterday’s trading session at $15.66, climbing 10.5% over the year. During the past six months, the stock has risen 1.9%. ALPMY’s trailing ev/ebitda of 8.05x compares to the industry average 20.89x.
ALPMY’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our POWR Ratings system. ALPMY also has an A rating for Value and Stability and a B for Growth and Quality. In the Medical - Pharmaceuticals industry, it is ranked #3.
To see additional POWR Ratings for Momentum and Sentiment, for ALPMY, Click here.
The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.
Want More Great Investing Ideas?
PFE shares were trading at $35.74 per share on Thursday afternoon, up $0.13 (+0.37%). Year-to-date, PFE has declined -1.85%, versus a 4.59% rise in the benchmark S&P 500 index during the same period.
About the Author: Namrata Sen Chanda
Namrata is an accomplished financial journalist, with nearly a decade of experience. She specializes in interpreting news releases and framing investment strategies, and has worked with some of the leading companies in real estate, banking, insurance, mutual funds, financial research, fintech, and investment education.4 Undervalued Pharmaceutical Stocks That Pay Dividends appeared first on StockNews.com