Market Inference Overview -- GSK Stock

Now trading at a price of $35.26, GSK has moved 1.2% so far today. In contrast, the S&P 500 index moved -0.6%. Read below for a basic value analysis of Series([], ).

GSK shares moved -22.6% over the last 52 weeks, with a high of $46.97 and a low of $28.47. During this time, the stock lagged the S&P 500 index by -14.8%. As of January 2022, the company's 50-day average price is $35.18. GSK plc, together with its subsidiaries, 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. The large-cap Healthcare company is based in Brentford, United Kingdom. GSK has not offered any dividends in the last year.

Thinner Operating Margins Than the 27.39% Industry Average:

2019-12-31 2020-12-31 2021-12-31 2022-12-31
Revenue (MM) $33,754 $34,099 $34,114 $29,324
Revenue Growth n/a 1.02% 0.04% -14.04%
Gross Margins 64.8% 65.7% 66.0% 67.4%
Gross Margins Growth n/a 1.39% 0.46% 2.12%
Operating Margins 18.6% 18.2% 19.6% 21.9%
Operating Margins Growth n/a -2.15% 7.69% 11.73%
Earnings Per Share $2.32 $2.85 $2.16 $7.32
EPS Growth n/a 22.84% -24.21% 238.89%
Free Cash Flow (MM) $5,857 $6,202 $5,021 $5,145
FCF Growth n/a 5.89% -19.04% 2.47%
Capital Expenditures (MM) -$2,163 -$2,239 -$2,931 -$2,258
Net Debt / EBITDA 2.83 2.34 2.12 0.03

GSK Is Fairly Priced at Current Levels:

Compared to the Healthcare sector's average of 13.21, GSK has a trailing twelve month P/E ratio of 13.1 and, according to its EPS guidance of 4, an expected P/E ratio of 8.8. GSK's PEG ratio is 0.27 based on its 48.25% annual average growth rate of historical and projected earnings per share. However, we believe that it is more prudent to calculate the PEG ratio using the broader market's 5-year expected EPS growth rate of 13.05%, because the growth rate implied by GSK's past and expected EPS is probably not sustainable. This more prudent approach shows a PEG ratio of 1.0, which still suggests that company's shares are still possibly undervalued.

GSK's P/B ratio is 6.7 compared to its sector average of 4.07. The company is likely overvalued in terms of its equity. The company's shares are currently trading 69.4% above their fair value as expressed by Benjamin Graham's formula:

√(22.5 * 4-year average EPS * book value per share) = √(22.5 * 3.66 * 5.26) = $20.81

GSK's elevated P/B ratio notwithstanding, the company's strong cash flows, decent earnings multiple, and healthy debt levels factor towards it being fairly valued.

Most of the Market Indicators on GSK Are Negative:

4 analysts are following GSK and have set target prices ranging from $35.5 to $63.75 per share. On average, they have given the company a rating of hold. At the current price of $35.26, GSK is trading -20.05% away from its average analyst target price of $44.11 per share, implying an analyst consensus of strong upside potential for the stock.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.