A look at GlaxoSmithKline

Headquartered in Brentford, Middlesex, England, GlaxoSmithKline (GSK) is a British multinational pharmaceutical company. For 1Q17, it reported EPS (earnings per share) of 25 pence at revenues of 7.4 billion pounds.

How GlaxoSmithKline’s Valuation Changed after 1Q17

The above graph shows analyst estimates for EPS and actual EPS for GlaxoSmithKline for the past nine quarters. Now let’s look at GlaxoSmithKline’s valuation multiples.

Forward PE

PE (price-to-earnings) multiples represent what one share can buy for an equity investor. GlaxoSmithKline is trading at a forward PE multiple of 15.4x, which is lower than the industry average of 16.4x as of May 31, 2017. Other competitors such as Pfizer (PFE), Sanofi (SNY), and Novo Nordisk (NVO) are trading at forward PE multiples of 12.2x, 15.2x, and 18.1x, respectively.

EV-to-EBITDA multiples

On a capital structure neutral basis, GSK currently trades at a forward EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) multiple of ~9.4x. That’s lower than the industry average of ~11.0x. Other competitors such as Pfizer (PFE), Sanofi (SNY), and Novo Nordisk (NVO) are trading at forward EV-to-EBITDA multiples of 9.9x, 10.9x, and 9.9x, respectively.

Analyst recommendations

According to data as of May 31, 2017, GSK stock has risen ~1.5% over the past 12 months. Analysts estimate that the stock has the potential to return ~9.5% over the next 12 months. Analyst recommendations show a 12-month target price of $47.55 per share compared to the last price of $43.41 per share on May 30, 2017. Also, ~50.0% of Wall Street analysts recommend a “buy,” and 50.0% recommend a “hold.” The consensus rating for GlaxoSmithKline stands at 2.0, which represents a moderate buy for long-term growth investors.

To divest the risk, you can consider ETFs such as the Vanguard FTSE All-World Ex-US ETF (VEU) which holds 0.60% of its total assets in GlaxoSmithKline.

Latest articles

This year, Pfizer (PFE) stock has fallen 0.34% and Bristol-Myers Squibb (BMY) stock has fallen 6.48%. Both companies are focused on strengthening their position in the high-growth oncology and immunology markets. Let's take a closer look at each.

Walt Disney’s (DIS) latest movie, Toy Story 4, has reportedly broken records in the opening weekend with $118 million in sales. However, the opening weekend collection was behind analysts’ expectations of at least $150 million in the first weekend.

24 Jun

Will Home Depot’s Upward Momentum to Continue?

WRITTEN BY Rajiv Nanjapla

As of June 21, Home Depot (HD) was trading at $209.39, which implies a rise of 9.7% since the announcement of its first-quarter earnings on May 21. Also, the company was trading at a premium of 32.4% from its 52-week low of $158.09 and a discount of 2.8% from its 52-week high of $215.43.

On June 21, Aurora Cannabis (ACB) made an announcement that indicated that it will move towards higher margin vape products. In addition, the company also believes concentrates and edibles will command higher margins. In anticipation of this development, the company announced the expansion of its facility to capitalize on growth related to these segments.

Shares of Mondelēz International (MDLZ) are scaling new heights thanks to its stellar gains so far this year. Mondelēz stock is up 38.0% on a YTD (year-to-date) basis, and it closed at $55.25—just a shade lower than its 52-week high of $55.71—on June 21.

24 Jun

How Long Will Facebook's Libra Fuel Bitcoin Rally?

WRITTEN BY Mayur Sontakke, CFA, FRM

Ever since the news about Facebook’s (FB) cryptocurrency project broke, Bitcoin has rallied on the hope that Facebook’s entry in the space will help make cryptocurrencies mainstream. Facebook’s cryptocurrency will be called Libra and will be governed by an association with 28 founding members across industries.

172.31.38.64