GSK PLC-SPON ADR (GSK) Stock Fundamental Analysis
NYSE:GSK - New York Stock Exchange, Inc. - US37733W2044 - ADR - Currency: USD
Overall GSK gets a fundamental rating of 5 out of 10. We evaluated GSK against 198 industry peers in the Pharmaceuticals industry. While GSK belongs to the best of the industry regarding profitability, there are concerns on its financial health. GSK may be a bit undervalued, certainly considering the very reasonable score on growth
1. Profitability
1.1 Basic Checks
GSK had positive earnings in the past year.
In the past year GSK had a positive cash flow from operations.
GSK had positive earnings in each of the past 5 years.
GSK had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
Looking at the Return On Assets, with a value of 4.33%, GSK belongs to the top of the industry, outperforming 87.88% of the companies in the same industry.
GSK's Return On Equity of 18.84% is amongst the best of the industry. GSK outperforms 91.41% of its industry peers.
With an excellent Return On Invested Capital value of 17.81%, GSK belongs to the best of the industry, outperforming 92.93% of the companies in the same industry.
GSK had an Average Return On Invested Capital over the past 3 years of 18.38%. This is significantly below the industry average of 41.61%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 4.33% | ||
| ROE | 18.84% | ||
| ROIC | 17.81% |
ROA(3y)12.52%
ROA(5y)10.05%
ROE(3y)65.63%
ROE(5y)53.08%
ROIC(3y)18.38%
ROIC(5y)14.53%
1.3 Margins
The Profit Margin of GSK (8.21%) is better than 85.86% of its industry peers.
In the last couple of years the Profit Margin of GSK has declined.
GSK's Operating Margin of 24.87% is amongst the best of the industry. GSK outperforms 89.39% of its industry peers.
In the last couple of years the Operating Margin of GSK has remained more or less at the same level.
The Gross Margin of GSK (71.90%) is better than 78.79% of its industry peers.
GSK's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 24.87% | ||
| PM (TTM) | 8.21% | ||
| GM | 71.9% |
OM growth 3Y3.67%
OM growth 5Y-0.3%
PM growth 3Y-22.68%
PM growth 5Y-9.82%
GM growth 3Y2.09%
GM growth 5Y0.57%
2. Health
2.1 Basic Checks
The Return on Invested Capital (ROIC) is well above the Cost of Capital (WACC), so GSK is creating value.
The number of shares outstanding for GSK has been increased compared to 1 year ago.
The number of shares outstanding for GSK has been increased compared to 5 years ago.
Compared to 1 year ago, GSK has an improved debt to assets ratio.
2.2 Solvency
GSK has an Altman-Z score of 1.85. This is not the best score and indicates that GSK is in the grey zone with still only limited risk for bankruptcy at the moment.
GSK has a better Altman-Z score (1.85) than 66.67% of its industry peers.
GSK has a debt to FCF ratio of 4.76. This is a neutral value as GSK would need 4.76 years to pay back of all of its debts.
GSK has a better Debt to FCF ratio (4.76) than 84.34% of its industry peers.
A Debt/Equity ratio of 1.07 is on the high side and indicates that GSK has dependencies on debt financing.
GSK's Debt to Equity ratio of 1.07 is on the low side compared to the rest of the industry. GSK is outperformed by 70.71% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.07 | ||
| Debt/FCF | 4.76 | ||
| Altman-Z | 1.85 |
ROIC/WACC2.25
WACC7.9%
2.3 Liquidity
A Current Ratio of 0.78 indicates that GSK may have some problems paying its short term obligations.
The Current ratio of GSK (0.78) is worse than 87.37% of its industry peers.
A Quick Ratio of 0.52 indicates that GSK may have some problems paying its short term obligations.
With a Quick ratio value of 0.52, GSK is not doing good in the industry: 89.39% of the companies in the same industry are doing better.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.78 | ||
| Quick Ratio | 0.52 |
3. Growth
3.1 Past
The Earnings Per Share has been growing slightly by 2.77% over the past year.
Measured over the past 5 years, GSK shows a small growth in Earnings Per Share. The EPS has been growing by 0.56% on average per year.
GSK shows a small growth in Revenue. In the last year, the Revenue has grown by 3.46%.
The Revenue has been decreasing by -1.45% on average over the past years.
EPS 1Y (TTM)2.77%
EPS 3Y4.05%
EPS 5Y0.56%
EPS Q2Q%-19.72%
Revenue 1Y (TTM)3.46%
Revenue growth 3Y8.31%
Revenue growth 5Y-1.45%
Sales Q2Q%0.81%
3.2 Future
Based on estimates for the next years, GSK will show a small growth in Earnings Per Share. The EPS will grow by 6.13% on average per year.
The Revenue is expected to grow by 3.33% on average over the next years.
EPS Next Y8.58%
EPS Next 2Y9.75%
EPS Next 3Y8.7%
EPS Next 5Y6.13%
Revenue Next Year4.76%
Revenue Next 2Y5.05%
Revenue Next 3Y4.71%
Revenue Next 5Y3.33%
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
With a Price/Earnings ratio of 9.10, the valuation of GSK can be described as very reasonable.
Compared to the rest of the industry, the Price/Earnings ratio of GSK indicates a rather cheap valuation: GSK is cheaper than 91.41% of the companies listed in the same industry.
The average S&P500 Price/Earnings ratio is at 28.88. GSK is valued rather cheaply when compared to this.
GSK is valuated reasonably with a Price/Forward Earnings ratio of 8.39.
GSK's Price/Forward Earnings ratio is rather cheap when compared to the industry. GSK is cheaper than 92.42% of the companies in the same industry.
GSK is valuated cheaply when we compare the Price/Forward Earnings ratio to 21.20, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 9.1 | ||
| Fwd PE | 8.39 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, GSK is valued cheaply inside the industry as 89.39% of the companies are valued more expensively.
Based on the Price/Free Cash Flow ratio, GSK is valued cheaper than 84.85% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 16.89 | ||
| EV/EBITDA | 6.96 |
4.3 Compensation for Growth
GSK's PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
GSK has a very decent profitability rating, which may justify a higher PE ratio.
PEG (NY)1.06
PEG (5Y)16.21
EPS Next 2Y9.75%
EPS Next 3Y8.7%
5. Dividend
5.1 Amount
GSK has a Yearly Dividend Yield of 4.38%, which is a nice return.
GSK's Dividend Yield is rather good when compared to the industry average which is at 4.58. GSK pays more dividend than 95.45% of the companies in the same industry.
GSK's Dividend Yield is rather good when compared to the S&P500 average which is at 2.45.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 4.38% |
5.2 History
The dividend of GSK decreases each year by -9.84%.
GSK has paid a dividend for at least 10 years, which is a reliable track record.
GSK has decreased its dividend recently.
Dividend Growth(5Y)-9.84%
Div Incr Years1
Div Non Decr Years1
5.3 Sustainability
GSK pays out 94.91% of its income as dividend. This is not a sustainable payout ratio.
DP94.91%
EPS Next 2Y9.75%
EPS Next 3Y8.7%
39.85
+0.88 (+2.26%)
Chartmill FA Rating
GICS SectorHealth Care
GICS IndustryGroupPharmaceuticals, Biotechnology & Life Sciences
GICS IndustryPharmaceuticals
Earnings (Last)
Earnings (Next)
Inst Owners45.07%
Inst Owner Change0%
Ins Owners0.16%
Ins Owner ChangeN/A
Market Cap80.75B
Analysts68.75
Price Target44.98 (12.87%)
Short Float %0.82%
Short Ratio2.91
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 4.38% |
Yearly Dividend1.63
Dividend Growth(5Y)-9.84%
DP94.91%
Div Incr Years1
Div Non Decr Years1
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)14.68%
Min EPS beat(2)10.89%
Max EPS beat(2)18.46%
EPS beat(4)4
Avg EPS beat(4)13.84%
Min EPS beat(4)10.89%
Max EPS beat(4)18.46%
EPS beat(8)7
Avg EPS beat(8)9.39%
EPS beat(12)11
Avg EPS beat(12)10.36%
EPS beat(16)15
Avg EPS beat(16)11.73%
Revenue beat(2)1
Avg Revenue beat(2)-0.88%
Min Revenue beat(2)-3.45%
Max Revenue beat(2)1.68%
Revenue beat(4)3
Avg Revenue beat(4)0.46%
Min Revenue beat(4)-3.45%
Max Revenue beat(4)2.46%
Revenue beat(8)7
Avg Revenue beat(8)2.27%
Revenue beat(12)9
Avg Revenue beat(12)0.03%
Revenue beat(16)9
Avg Revenue beat(16)-5.45%
PT rev (1m)3.04%
PT rev (3m)3.56%
EPS NQ rev (1m)-2.92%
EPS NQ rev (3m)-11.65%
EPS NY rev (1m)-0.39%
EPS NY rev (3m)0.41%
Revenue NQ rev (1m)-1.83%
Revenue NQ rev (3m)-2%
Revenue NY rev (1m)-0.39%
Revenue NY rev (3m)0.71%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 9.1 | ||
| Fwd PE | 8.39 | ||
| P/S | 1.92 | ||
| P/FCF | 16.89 | ||
| P/OCF | 9.21 | ||
| P/B | 4.41 | ||
| P/tB | N/A | ||
| EV/EBITDA | 6.96 |
EPS(TTM)4.38
EY10.99%
EPS(NY)4.75
Fwd EY11.92%
FCF(TTM)2.36
FCFY5.92%
OCF(TTM)4.33
OCFY10.86%
SpS20.72
BVpS9.03
TBVpS-5.83
PEG (NY)1.06
PEG (5Y)16.21
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 4.33% | ||
| ROE | 18.84% | ||
| ROCE | 20.66% | ||
| ROIC | 17.81% | ||
| ROICexc | 19.85% | ||
| ROICexgc | 59.11% | ||
| OM | 24.87% | ||
| PM (TTM) | 8.21% | ||
| GM | 71.9% | ||
| FCFM | 11.38% |
ROA(3y)12.52%
ROA(5y)10.05%
ROE(3y)65.63%
ROE(5y)53.08%
ROIC(3y)18.38%
ROIC(5y)14.53%
ROICexc(3y)22.56%
ROICexc(5y)17.82%
ROICexgc(3y)78.4%
ROICexgc(5y)77.5%
ROCE(3y)21.97%
ROCE(5y)17.32%
ROICexcg growth 3Y-7.02%
ROICexcg growth 5Y-6.42%
ROICexc growth 3Y24.64%
ROICexc growth 5Y6.13%
OM growth 3Y3.67%
OM growth 5Y-0.3%
PM growth 3Y-22.68%
PM growth 5Y-9.82%
GM growth 3Y2.09%
GM growth 5Y0.57%
F-Score5
Asset Turnover0.53
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.07 | ||
| Debt/FCF | 4.76 | ||
| Debt/EBITDA | 1.41 | ||
| Cap/Depr | 116.9% | ||
| Cap/Sales | 9.5% | ||
| Interest Coverage | 12.34 | ||
| Cash Conversion | 63.31% | ||
| Profit Quality | 138.72% | ||
| Current Ratio | 0.78 | ||
| Quick Ratio | 0.52 | ||
| Altman-Z | 1.85 |
F-Score5
WACC7.9%
ROIC/WACC2.25
Cap/Depr(3y)108.08%
Cap/Depr(5y)108.56%
Cap/Sales(3y)8.31%
Cap/Sales(5y)9.2%
Profit Quality(3y)87.63%
Profit Quality(5y)97.06%
High Growth Momentum
Growth
EPS 1Y (TTM)2.77%
EPS 3Y4.05%
EPS 5Y0.56%
EPS Q2Q%-19.72%
EPS Next Y8.58%
EPS Next 2Y9.75%
EPS Next 3Y8.7%
EPS Next 5Y6.13%
Revenue 1Y (TTM)3.46%
Revenue growth 3Y8.31%
Revenue growth 5Y-1.45%
Sales Q2Q%0.81%
Revenue Next Year4.76%
Revenue Next 2Y5.05%
Revenue Next 3Y4.71%
Revenue Next 5Y3.33%
EBIT growth 1Y4.07%
EBIT growth 3Y12.28%
EBIT growth 5Y-1.74%
EBIT Next Year33.76%
EBIT Next 3Y14.7%
EBIT Next 5Y8.94%
FCF growth 1Y-19.26%
FCF growth 3Y-10.73%
FCF growth 5Y-9.42%
OCF growth 1Y-3.16%
OCF growth 3Y-6.24%
OCF growth 5Y-3.96%