Now trading at a price of $43.67, GSK has moved 1.3% so far today.
GSK returned gains of 18.0% last year, with its stock price reaching a high of $45.93 and a low of $33.67. Over the same period, the stock underperformed the S&P 500 index by -2.6%. The company's 50-day average price was $40.43. GSK plc, together with its subsidiaries, engages in the research, development, and manufacture of vaccines, and specialty and general medicines to prevent and treat disease in the United Kingdom, the United States, and internationally. Based in Brentford, United Kingdom, the Large-Cap Health Care company has 70,212 full time employees. GSK has offered a 1.4% dividend yield over the last 12 months.
Wider Gross Margins Than the Industry Average of 59.67%:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $30,821 | $33,754 | $24,354 | $24,696 | $29,324 | $30,328 |
| Gross Margins | 67% | 65% | 67% | 67% | 67% | 72% |
| Net Margins | 13% | 16% | 26% | 21% | 53% | 18% |
| Net Income (M) | $4,046 | $5,268 | $6,388 | $5,096 | $15,621 | $5,308 |
| Diluted Shares (M) | 5,379 | 5,383 | 5,385 | 5,387 | 4,311 | 4,312 |
| Earnings Per Share | $0.73 | $0.93 | $1.43 | $1.08 | $3.66 | $1.2 |
| EPS Growth | n/a | 27.4% | 53.76% | -24.48% | 238.89% | -67.21% |
| Free Cash Flow (M) | $8,421 | $8,020 | $8,441 | $7,952 | $7,403 | $6,768 |
| Total Debt (M) | $20,271 | $23,590 | $23,425 | $20,572 | $17,035 | $15,205 |
| Net Debt / EBITDA | 2.23 | 2.03 | 2.13 | 2.52 | 1.55 | 1.36 |
| Current Ratio | 0.75 | 0.81 | 0.91 | 0.79 | 0.91 | 0.88 |
GSK has wider gross margins than its peer group, positive EPS growth, and healthy leverage levels. However, the firm has not enough current assets to cover current liabilities because its current ratio is 0.88. Finally, we note that GSK has positive cash flows.
an Increase in Expected Earnings Improves Its Value Outlook but Trades Above Its Graham Number:
GSK has a trailing twelve month P/E ratio of 13.6, compared to an average of 27.61 for the Health Care sector. Based on its EPS guidance of $4.59, the company has a forward P/E ratio of 8.8. According to the 30.0% compound average growth rate of GSK's historical and projected earnings per share, the company's PEG ratio is 0.45. Taking the weighted average of the company's EPS CAGR and the broader market's 5-year projected EPS growth rate, we obtain a normalized growth rate of 16.7%. On this basis, the company's PEG ratio is 0.81. This suggests that its shares are undervalued. In contrast, GSK is likely overvalued compared to the book value of its equity, since its P/B ratio of 12.4 is higher than the sector average of 3.69. The company's shares are currently trading 387.9% below their Graham number. Ultimately, GSK's strong cash flows, decent earnings multiple, and healthy debt levels factor towards it being fairly valued, its elevated P/B ratio notwithstanding.
Analysts Give GSK an Average Rating of Buy:
The 6 analysts following GSK have set target prices ranging from $39.3 to $54.0 per share, for an average of $46.07 with a buy rating. The company is trading -5.2% away from its average target price, indicating that there is an analyst consensus of some upside potential.
The largest shareholder is Dodge & Cox Inc, whose 3% stake in the company is worth $2,984,282,691.
