What All You Need To Know About GlaxoSmithKline (GSK.L)?

  • Feb 15, 2019 GMT
  • Team Kalkine
What All You Need To Know About GlaxoSmithKline (GSK.L)?

Business Overview

GlaxoSmithKline Plc (GSK.L) is a healthcare company, which focuses on the development, manufacture and commercialisation of pharmaceuticals, vaccines and consumer healthcare products. It offers drugs for the treatment of HIV, respiratory, cancer, immuno-inflammation, anti-viral, central nervous system (CNS), metabolic, cardiovascular and urogenital, anti-bacterial, dermatology and rare diseases. The company offers over-the-counter (OTC) products for pain relief, oral health, nutrition, skin health and gastrointestinal disorders.

Recent Developments

  • On 6 February 2019, GSK reported its full-year 2018 Final Results.
  • On 5 February 2019, GSK and Merck announced their strategic pact to develop and distribute, M7824 immunotherapy.
  • On 22 January 2019, GSK notified exchange that the company had completed the acquisition of TESARO, an oncology-focused pharmaceutical company, for a total cash consideration of $5.1 billion approximately.
  • On 21 January 2019, GSK announced that Philip Hampton, Non-Executive chairman at GSK had shown its intention to step down from his post.
  • On 19 December 2018, GSK announced that GSK and Pfizer Inc are going to combine their consumer health businesses to form a world leading Consumer Healthcare Joint Venture.
  • On 3 December 2018, Company informed to sell off its Horlicks brand and other consumer healthcare nutrition products to the Dove soap maker Unilever.

Financial Highlights (GBP Million)

Result Commentary (FY 2018)

  • In FY18, GSK reported sales growth in all its three segments, Pharmaceuticals business grew 2 %, Vaccines business grew 16%, and Consumer Healthcare business grew 2% respectively.
  • Under the Pharmaceuticals business segment, new respiratory products sales grew by 38%, HIV & Dolutegravir medicine sales increased by 11%, and 16% and Benlysta sales grew by 29% respectively on Y-O-Y basis.
  • Under the Vaccines business segment, US vaccines sales grew by 48%, and Meningitis vaccines sales rose by 2% respectively.
  • Under the Consumer Healthcare business segment, Wellness sales grew by 1%, Oral health products sales increased by 4 per cent, Nutritional sales grew by 1%, and Skin sales decreased by -1% respectively on a year-on-year basis.
  • The company reported a gross profit of GBP 20,580 million, up 4% compared to its FY17 gross profit.
  • Operating profit and pre-tax profit of the company grew significantly in FY18 and were up by 31% and 36% respectively as compared to its FY17 numbers.
  • Net Profit (Attributed to Shareholders) in FY18 grew by 136 % at GBP 3,623 million.

 

Key Ratios

Ratios Commentary

  • GSK's gross margin of 68.5% during FY18 is trending towards the industry median of 72.3%, although GP margin in FY18 was a bit lower than the FY17 GP margin.
  • EBITDA margin of 32.3% for FY18 stood considerably higher than the industry median of 24.6%.
  • Pre-tax and Post-tax margins of 15.6% and 13.5% surged when compared with the industry average of 9.9% and 6.7% in FY18.
  • ROE stood at 174.7% which is remarkably higher than the industry median of 13.2%.
  • Although at liquidity front, GSK's liquidity position is much lower than the industry median of 1.93 in terms of current ratio.
  • The company is highly leveraged as compared to its peers. High debt sucked out liquidity from the company.

 

Stock Performance

stock performance(Source: London Stock Exchange)

At the closing price, the stock was trading 5% lower than its 52w High and 23% higher than its 52w low, which shows that share has the potential to make a new high. From a technical standpoint, the stock was trading above its 200, 100, 50 and 30 days' simple moving average (SMA). From valuation front, the stock was trading at a Trailing-Twelve-Month (TTM) PE of 13.1x compared to the industry median of -2.0x.

With Bank of England reducing the interest rates to a historic low level, the spotlight is back on diverse investment opportunities. 

Amidst this, are you getting worried about these falling interest rates and wondering where to put your money?

Well! Team Kalkine has a solution for you. You still can earn a relatively stable income by putting money in the dividend-paying stocks.

We think it is the perfect time when you should start accumulating selective dividend stocks to beat the low-interest rates, while we provide a tailored offering in view of valuable stock opportunities and any dividend cut backs to be considered amid scenarios including a prolonged market meltdown.

To know more about these dividend stocks, click here

CLICK HERE FOR YOUR FREE REPORT!
   
x
We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it. OK