Pfizer Inc. (PFE) Is a Trending Stock: Facts to Know Before Betting on It

Pfizer (PFE) has recently been on Zacks.com's list of the most searched stocks. Therefore, you might want to consider some of the key factors that could influence the stock's performance in the near future.Over the past month, shares of this drugmaker have returned -3.7%, compared to the Zacks S&P 500 composite's +2.9% change. During this period, the Zacks Large Cap Pharmaceuticals industry, which Pfizer falls in, has gained 0%. The key question now is: What could be the stock's future direction?Although media reports or rumors about a significant change in a company's business prospects usually cause its stock to trend and lead to an immediate price change, there are always certain fundamental factors that ultimately drive the buy-and-hold decision.Revisions to Earnings EstimatesHere at Zacks, we prioritize appraising the change in the projection of a company's future earnings over anything else. That's because we believe the present value of its future stream of earnings is what determines the fair value for its stock.Our analysis is essentially based on how sell-side analysts covering the stock are revising their earnings estimates to take the latest business trends into account. When earnings estimates for a company go up, the fair value for its stock goes up as well. And when a stock's fair value is higher than its current market price, investors tend to buy the stock, resulting in its price moving upward. Because of this, empirical studies indicate a strong correlation between trends in earnings estimate revisions and short-term stock price movements.Pfizer is expected to post earnings of $0.49 per share for the current quarter, representing a year-over-year change of +390%. Over the last 30 days, the Zacks Consensus Estimate has changed -5%.The consensus earnings estimate of $2.91 for the current fiscal year indicates a year-over-year change of +58.2%. This estimate has changed -0.3% over the last 30 days.For the next fiscal year, the consensus earnings estimate of $2.91 indicates no change from what Pfizer is expected to report a year ago. Over the past month, the estimate has changed -0.4%.Having a strong externally audited track record, our proprietary stock rating tool, the Zacks Rank, offers a more conclusive picture of a stock's price direction in the near term, since it effectively harnesses the power of earnings estimate revisions. Due to the size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, Pfizer is rated Zacks Rank #2 (Buy).The chart below shows the evolution of the company's forward 12-month consensus EPS estimate:12 Month EPSRevenue Growth ForecastWhile earnings growth is arguably the most superior indicator of a company's financial health, nothing happens as such if a business isn't able to grow its revenues. After all, it's nearly impossible for a company to increase its earnings for an extended period without increasing its revenues. So, it's important to know a company's potential revenue growth.For Pfizer, the consensus sales estimate for the current quarter of $17.5 billion indicates a year-over-year change of +22.8%. For the current and next fiscal years, $63.36 billion and $62.98 billion estimates indicate +8.3% and -0.6% changes, respectively.Last Reported Results and Surprise HistoryPfizer reported revenues of $17.7 billion in the last reported quarter, representing a year-over-year change of +33.8%. EPS of $1.06 for the same period compares with -$0.17 a year ago.Compared to the Zacks Consensus Estimate of $15.19 billion, the reported revenues represent a surprise of +16.53%. The EPS surprise was +65.62%.The company beat consensus EPS estimates in each of the trailing four quarters. The company topped consensus revenue estimates three times over this period.ValuationNo investment decision can be efficient without considering a stock's valuation. Whether a stock's current price rightly reflects the intrinsic value of the underlying business and the company's growth prospects is an essential determinant of its future price performance.Comparing the current value of a company's valuation multiples, such as its price-to-earnings (P/E), price-to-sales (P/S), and price-to-cash flow (P/CF), to its own historical values helps ascertain whether its stock is fairly valued, overvalued, or undervalued, whereas comparing the company relative to its peers on these parameters gives a good sense of how reasonable its stock price is.As part of the Zacks Style Scores system, the Zacks Value Style Score (which evaluates both traditional and unconventional valuation metrics) organizes stocks into five groups ranging from A to F (A is better than B; B is better than C; and so on), making it helpful in identifying whether a stock is overvalued, rightly valued, or temporarily undervalued.Pfizer is graded A on this front, indicating that it is trading at a discount to its peers. Click here to see the values of some of the valuation metrics that have driven this grade.ConclusionThe facts discussed here and much other information on Zacks.com might help determine whether or not it's worthwhile paying attention to the market buzz about Pfizer. However, its Zacks Rank #2 does suggest that it may outperform the broader market in the near term.Free Today: Profiting from The Future’s Brightest Energy SourceThe demand for electricity is growing exponentially. At the same time, we’re working to reduce our dependence on fossil fuels like oil and natural gas. Nuclear energy is an ideal replacement.Leaders from the US and 21 other countries recently committed to TRIPLING the world’s nuclear energy capacities. 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