Haleon returned gains of 11.6% last year, with its stock price reaching a high of $9.05 and a low of $5.59. Over the same period, the stock underperformed the S&P 500 index by -3.0%. As of April 2023, the company's 50-day average price was $8.59. Haleon plc, together with its subsidiaries, engages in the research, development, manufacture, and sale of various consumer healthcare products in North America, Europe, the Middle East, Africa, Latin America, and the Asia Pacific. Based in Weybridge, United Kingdom, the large-cap Consumer Discretionary company has 24,622 full time employees. Haleon has not offered a regular dividend during the last year.
The Company May Be Profitable, but Its Balance Sheet Is Highly Leveraged:
| 2019-12-31 | 2020-12-31 | 2021-12-31 | 2022-12-31 | |
|---|---|---|---|---|
| Revenue (MM) | $8,480 | $9,892 | $9,545 | $10,858 |
| Gross Margins | 56.6% | 59.8% | 62.3% | 60.6% |
| Operating Margins | 10.6% | 16.2% | 17.2% | 16.8% |
| Net Margins | 7.72% | 11.58% | 14.56% | 9.76% |
| Net Income (MM) | $655 | $1,145 | $1,390 | $1,060 |
| Net Interest Income (MM) | -$10 | -$13 | -$2 | -$207 |
| Depreciation & Amort. (MM) | -$260 | -$305 | -$268 | -$287 |
| Earnings Per Share | $0.14 | $0.25 | $0.3 | $0.3 |
| EPS Growth | n/a | 78.57% | 20.0% | 0.0% |
| Diluted Shares (MM) | 4,617 | 4,617 | 4,617 | 4,617 |
| Free Cash Flow (MM) | $543 | $1,089 | $1,058 | $1,735 |
| Capital Expenditures (MM) | -$243 | -$318 | -$298 | -$328 |
| Net Current Assets (MM) | -$2,488 | -$2,899 | -$2,720 | -$14,299 |
| Current Ratio | 1.36 | 1.25 | 1.24 | 0.93 |
| Long Term Debt (MM) | n/a | n/a | n/a | $10,003 |
| Net Debt / EBITDA | n/a | n/a | n/a | 4.75 |
Haleon benefits from growing revenues and increasing reinvestment in the business, exceptional EPS growth, and wider gross margins than its peer group. The company's financial statements show average operating margins with a positive growth rate and consistent free cash flow. However, the firm has a highly leveraged balance sheet.
A Lower P/B Ratio Than Its Sector Average but Trades Above Its Graham Number:
Haleon has a trailing twelve month P/E ratio of 28.6 compared to the Consumer Discretionary sector's average of 22.33. The company doesn't provide forward earnings guidance, and the compound average growth rate of its last 4 years of reported EPS is 21.0%. On this basis, Haleon's PEG ratio is 1.36. Using instead the 10.3% weighted average of Haleon's earnings CAGR and the broader market's anticipated 5-year EPS growth rate, the company's PEG ratio is 2.78, which suggests that its shares may be overpriced. In contrast, the market is likely undervaluing Haleon in terms of its equity because its P/B ratio is 2.3 while the sector average is 3.12. The company's shares are currently trading 82.7% above their Graham number.
Overview of Haleon's Market Factors:
The largest shareholder is Dodge & Cox Inc, whose 2% stake in the company is worth $913,253,138.
