The global stock market has taken a big hit recently due to the ongoing coronavirus pandemic. While the GSK share price has also dropped, investors may see it GlaxoSmithKline shares as a safer long-term bet, especially given its history with developing vaccines. GlaxoSmithKline plc (LON:GSK) is a British pharmaceutical company based in Brentford. It is part of the FTSE 100 and helped developed the world’s first malaria vaccine in 2014.
|52-week range||1190.8p - 1656.5665p|
|50-day moving average||1311.0286p|
|200-day moving average||1393.6837p|
|Wall St. target price||1644.5p|
|Dividend yield||0.8p (0.07%)|
|Earnings per share (TTM)||114.1p|
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Valuing GlaxoSmithKline stock is incredibly difficult, and any metric has to be viewed as part of a bigger picture of GlaxoSmithKline's overall performance. However, analysts commonly use some key metrics to help gauge the value of a stock.
GlaxoSmithKline's current share price divided by its per-share earnings (EPS) over a 12-month period gives a "trailing price/earnings ratio" of roughly 11x. In other words, GlaxoSmithKline shares trade at around 11x recent earnings.
That's relatively low compared to, say, the trailing 12-month P/E ratio for the FTSE 250 at the end of September 2019 (19.71). The low P/E ratio could mean that investors are pessimistic about the outlook for the shares or simply that they're under-valued.
However, GlaxoSmithKline's P/E ratio is best considered in relation to those of others within the drug manufacturers-general industry or those of similar companies.
GlaxoSmithKline's "price/earnings-to-growth ratio" can be calculated by dividing its P/E ratio by its growth – to give 7.7439. A low ratio can be interpreted as meaning the shares offer better value, while a higher ratio can be interpreted as meaning the shares offer worse value.
The PEG ratio provides a broader view than just the P/E ratio, as it gives more insight into GlaxoSmithKline's future profitability. By accounting for growth, it could also help you if you're comparing the share prices of multiple high-growth companies.
However, it's sensible to consider GlaxoSmithKline's PEG ratio in relation to those of similar companies.
GlaxoSmithKline's EBITDA (earnings before interest, taxes, depreciation and amortisation) is a whopping £8.4 billion.
The EBITDA is a measure of a GlaxoSmithKline's overall financial performance and is widely used to measure a its profitability.
To put GlaxoSmithKline's EBITDA into context you can compare it against that of similar companies.
|Revenue TTM||£34.1 billion|
|Operating margin TTM||23.62%|
|Gross profit TTM||£23.2 billion|
|Return on assets TTM||6.29%|
|Return on equity TTM||32.62%|
|Market capitalisation||£60.8 billion|
TTM: trailing 12 months
Environmental, social and governance (known as ESG) criteria are a set of three factors used to measure the sustainability and social impact of companies like GlaxoSmithKline.
When it comes to ESG scores, lower is better, and lower scores are generally associated with lower risk for would-be investors.
Total ESG risk: 28.51
Socially conscious investors use ESG scores to screen how an investment aligns with their worldview, and GlaxoSmithKline's overall score of 28.51 (as at 01/01/2019) is pretty good – landing it in it in the 35th percentile of companies rated in the same sector.
ESG scores are increasingly used to estimate the level of risk a company like GlaxoSmithKline is exposed to within the areas of "environmental" (carbon footprint, resource use etc.), "social" (health and safety, human rights etc.), and "governance" (anti-corruption, tax transparency etc.).
To gain some more context, you can compare GlaxoSmithKline's total ESG risk score against those of similar companies.
Environmental score: 3.88/100
GlaxoSmithKline's environmental score of 3.88 puts it squarely in the 6th percentile of companies rated in the same sector. This could suggest that GlaxoSmithKline is a leader in its sector terms of its environmental impact, and exposed to a lower level of risk.
Social score: 16.94/100
GlaxoSmithKline's social score of 16.94 puts it squarely in the 6th percentile of companies rated in the same sector. This could suggest that GlaxoSmithKline is a leader in its sector when it comes to taking good care of its workforce and the communities it impacts.
Governance score: 9.69/100
GlaxoSmithKline's governance score puts it squarely in the 6th percentile of companies rated in the same sector. That could suggest that GlaxoSmithKline is a leader in its sector when it comes to responsible management and strategy, and exposed to a lower level of risk.
Controversy score: 3/5
ESG scores also evaluate any incidences of controversy that a company has been involved in. A high-profile company, GlaxoSmithKline scored a 3 out of 5 for controversy – a middle-of-the-table result reflecting that GlaxoSmithKline hasn't always managed to keep its nose clean.
Wondering how that compares? Below are the controversy scores of similar companies.
|Total ESG score||28.51|
|Total ESG percentile||34.54|
|Environmental score percentile||6|
|Social score percentile||6|
|Governance score percentile||6|
|Level of controversy||3|
Dividend payout ratio: 6908.46% of net profits
Recently GlaxoSmithKline has paid out, on average, around 6908.46% of net profits as dividends. That has enabled analysts to estimate a "forward annual dividend yield" of 6.66% of the current stock value. This means that over a year, based on recent payouts (which are sadly no guarantee of future payouts), GlaxoSmithKline shareholders could enjoy a 6.66% return on their shares, in the form of dividend payments. In GlaxoSmithKline's case, that would currently equate to about 0.8p per share.
GlaxoSmithKline's payout ratio would broadly be considered high, and as such this stock could appeal to those looking to generate an income. Bear in mind however that companies should normally also look to re-invest a decent amount of net profits to ensure future growth.
The latest dividend was paid out to all shareholders who bought their shares by 18 February 2021 (the "ex-dividend date").
GlaxoSmithKline's dividend payout ratio is perhaps best considered in relation to those of similar companies.
GlaxoSmithKline's shares were split on a 2:1 basis on 28 October 1991. So if you had owned 1 share the day before before the split, the next day you'd have owned 2 shares. This wouldn't directly have changed the overall worth of your GlaxoSmithKline shares – just the quantity. However, indirectly, the new 50% lower share price could have impacted the market appetite for GlaxoSmithKline shares which in turn could have impacted GlaxoSmithKline's share price.
Over the last 12 months, GlaxoSmithKline's shares have ranged in value from as little as 1190.8p up to 1656.5665p. A popular way to gauge a stock's volatility is its "beta".
Beta is a measure of a share's volatility in relation to the market. The market (LSE average) beta is 1, while GlaxoSmithKline's is 0.3633. This would suggest that GlaxoSmithKline's shares are less volatile than average (for this exchange).
To put GlaxoSmithKline's beta into context you can compare it against those of similar companies.
GlaxoSmithKline plc engages in the creation, discovery, development, manufacture, and marketing of pharmaceutical products, vaccines, over-the-counter medicines, and health-related consumer products in the United Kingdom, the United States, and internationally. It operates through four segments: Pharmaceuticals, Pharmaceuticals R&D, Vaccines, and Consumer Healthcare. The company offers pharmaceutical products comprising medicines in the therapeutic areas, such as respiratory, HIV, immuno-inflammation, oncology, anti-viral, central nervous system, cardiovascular and urogenital, metabolic, anti-bacterial, and dermatology. It also provides consumer healthcare products in wellness, oral health, nutrition, and skin health categories. The company offers its consumer healthcare products in the form of nasal sprays, tablets, syrups, lozenges, gum and trans-dermal patches, caplets, infant syrup drops, liquid filled suspension, wipes, gels, effervescents, toothpastes, toothbrushes, mouthwashes, denture adhesives and cleansers, topical creams and non-medicated patches, lip balm, gummies, and soft chews. It has collaboration agreements with 23andMe; Merck KGaA; Lyell Immunopharma; Novartis; CEPI; Innovax and Xiamen University; VBI; Viome; Sanofi SA; and CureVac. The company also has an agreement with Vir Biotechnology, Inc for research and development of new therapies for influenza and other respiratory viruses. GlaxoSmithKline plc was founded in 1715 and is headquartered in Brentford, the United Kingdom.
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