LSE:GSK

Stock Analysis Report

Executive Summary

GlaxoSmithKline plc 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.

Rewards

Trading at 34.8% below its fair value

Earnings are forecast to grow 10.37% per year

Earnings grew by 145% over the past year

Pays a high and reliable dividend of 4.43%

Risk Analysis

Has a high level of debt



Snowflake Analysis

Established dividend payer with proven track record.


Similar Companies

Share Price & News

How has GlaxoSmithKline's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: GSK has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

1.6%

GSK

1.9%

GB Pharmaceuticals

0.6%

GB Market


1 Year Return

23.2%

GSK

29.9%

GB Pharmaceuticals

12.1%

GB Market

Return vs Industry: GSK underperformed the UK Pharmaceuticals industry which returned 28% over the past year.

Return vs Market: GSK exceeded the UK Market which returned 12.7% over the past year.


Shareholder returns

GSKIndustryMarket
7 Day1.6%1.9%0.6%
30 Day1.4%1.0%1.5%
90 Day11.0%13.0%8.1%
1 Year29.5%23.2%35.1%29.9%18.0%12.1%
3 Year40.8%20.4%63.4%43.3%23.9%8.1%
5 Year62.1%22.7%76.7%40.4%41.7%8.8%

Price Volatility Vs. Market

How volatile is GlaxoSmithKline's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is GlaxoSmithKline undervalued compared to its fair value and its price relative to the market?

33.6%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: GSK (£18.04) is trading below our estimate of fair value (£27.66)

Significantly Below Fair Value: GSK is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: GSK is good value based on its PE Ratio (20x) compared to the Pharmaceuticals industry average (20.5x).

PE vs Market: GSK is poor value based on its PE Ratio (19.5x) compared to the UK market (18.5x).


Price to Earnings Growth Ratio

PEG Ratio: GSK is poor value based on its PEG Ratio (1.9x)


Price to Book Ratio

PB vs Industry: GSK is overvalued based on its PB Ratio (7.6x) compared to the GB Pharmaceuticals industry average (3x).


Next Steps

Future Growth

How is GlaxoSmithKline forecast to perform in the next 1 to 3 years based on estimates from 23 analysts?

10.4%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: GSK's forecast earnings growth (10.4% per year) is above the savings rate (0.5%).

Earnings vs Market: GSK's earnings (10.4% per year) are forecast to grow slower than the UK market (11.7% per year).

High Growth Earnings: GSK's earnings are forecast to grow, but not significantly.

Revenue vs Market: GSK's revenue (4.2% per year) is forecast to grow faster than the UK market (3.6% per year).

High Growth Revenue: GSK's revenue (4.2% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: GSK's Return on Equity is forecast to be very high in 3 years time (75.9%).


Next Steps

  • Explore growth companies in the Pharmaceuticals & Biotech industry.

Past Performance

How has GlaxoSmithKline performed over the past 5 years?

-20.9%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: GSK has high quality earnings.

Growing Profit Margin: GSK's current net profit margins (13.8%) are higher than last year (6.2%).


Past Earnings Growth Analysis

Earnings Trend: GSK's earnings have declined by -20.9% per year over the past 5 years.

Accelerating Growth: GSK's earnings growth over the past year (145%) exceeds its 5-year average (-20.9% per year).

Earnings vs Industry: GSK earnings growth over the past year (145%) exceeded the Pharmaceuticals industry 2.2%.


Return on Equity

High ROE: Whilst GSK's Return on Equity (27.97%) is high, this metric is skewed due to their high level of debt.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is GlaxoSmithKline's financial position?


Financial Position Analysis

Short Term Liabilities: GSK's short term assets (£21.0B) do not cover its short term liabilities (£25.5B).

Long Term Liabilities: GSK's short term assets (£21.0B) do not cover its long term liabilities (£39.7B).


Debt to Equity History and Analysis

Debt Level: GSK's debt to equity ratio (182.6%) is considered high.

Reducing Debt: GSK's debt to equity ratio has reduced from 328.8% to 182.6% over the past 5 years.

Debt Coverage: GSK's debt is well covered by operating cash flow (26.3%).

Interest Coverage: GSK's interest payments on its debt are well covered by EBIT (10.7x coverage).


Balance Sheet

Inventory Level: GSK has a high level of physical assets or inventory.

Debt Coverage by Assets: GSK's debt is not covered by short term assets (assets are 0.6x debt).


Next Steps

Dividend

What is GlaxoSmithKline's current dividend yield, its reliability and sustainability?

4.35%

Current Dividend Yield


Dividend Yield vs Market

company4.4%marketbottom25%1.8%markettop25%4.9%industryaverage3.4%forecastin3Years4.4%

Current dividend yield vs market & industry

Notable Dividend: GSK's dividend (4.43%) is higher than the bottom 25% of dividend payers in the UK market (1.83%).

High Dividend: GSK's dividend (4.43%) is low compared to the top 25% of dividend payers in the UK market (4.95%).


Stability and Growth of Payments

Stable Dividend: GSK's dividends per share have been stable in the past 10 years.

Growing Dividend: GSK's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: At its current payout ratio (86.6%), GSK's payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: GSK's dividends in 3 years are forecast to be covered by earnings (60.5% payout ratio).


Next Steps

Management

What is the CEO of GlaxoSmithKline's salary, the management and board of directors tenure and is there insider trading?

2.0yrs

Average management tenure


CEO

Emma Walmsley (49yo)

2.8yrs

Tenure

UK£5,887,000

Compensation

Ms. Emma N. Walmsley serves as an Independent Director of Microsoft Corp. since December 4, 2019. She serves as Chief Executive Officer of GlaxoSmithKline Plc since March 31, 2017. Ms. Walmsley served as t ...


CEO Compensation Analysis

Compensation vs Market: Emma's total compensation ($USD7.65M) is above average for companies of similar size in the UK market ($USD4.48M).

Compensation vs Earnings: Emma's compensation has increased by more than 20% in the past year.


Management Age and Tenure

2.0yrs

Average Tenure

56yo

Average Age

Experienced Management: GSK's management team is considered experienced (2 years average tenure).


Board Age and Tenure

3.6yrs

Average Tenure

60yo

Average Age

Experienced Board: GSK's board of directors are considered experienced (3.6 years average tenure).


Insider Trading

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

BuyUK£9,06224 Jul 19
Urs Rohner
EntityIndividual
Role
Member of the Board of Directors
Independent Non-Executive Director
Shares547.91
Max PriceUK£16.54
BuyUK£43,75024 Jul 19
Philip Hampton
EntityIndividual
Shares2,645.1
Max PriceUK£16.54
BuyUK£7,18824 Jul 19
Vivienne Cox
EntityIndividual
Role
Member of the Board of Directors
Independent Non-Executive Director
Shares434.55
Max PriceUK£16.54
BuyUK£9,06224 Jul 19
Manvinder Banga
EntityIndividual
Role
Lead Director
Senior Independent Non-Executive Director
Shares547.91
Max PriceUK£16.54
SellUK£558,62618 Feb 19
Claire Thomas
EntityIndividual
Shares35,253
Max PriceUK£15.85
SellUK£1,048,36918 Feb 19
Emma Walmsley
EntityIndividual
Role
Chief Executive Officer
CEO & Director
Shares66,159
Max PriceUK£15.85
SellUK£321,40818 Feb 19
Philip Thomson
EntityIndividual
Shares20,283
Max PriceUK£15.85

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Management Team

  • Hal Barron (56yo)

    Chief Scientific Officer

    • Tenure: 2yrs
    • Compensation: UK£6.56m
  • Karenann Terrell (58yo)

    Chief Digital & Technology Officer

    • Tenure: 2.3yrs
  • Diana Conrad

    Senior Vice President of Human Resources

    • Tenure: 0.8yrs
  • Iain Mackay (57yo)

    CFO & Executive Director

    • Tenure: 1yrs
  • David Redfern (53yo)

    Chief Strategy Officer

    • Tenure: 11.7yrs
  • Sarah Elton-Farr

    Head of Investor Relations

    • Emma Walmsley (49yo)

      CEO & Director

      • Tenure: 2.8yrs
      • Compensation: UK£5.89m
    • Nick Hirons

      Senior Vice President of Global Ethics & Compliance

      • Tenure: 5.3yrs
    • James Ford

      Senior VP & General Counsel

      • Tenure: 1.4yrs
    • Sally Jackson

      Senior Vice President of Global Communications & CEO Office

      • Tenure: 0.8yrs

    Board Members

    • Judy Lewent (70yo)

      Independent Non-Executive Director

      • Tenure: 8.8yrs
      • Compensation: UK£437.00k
    • Jon Symonds (60yo)

      Non-Executive Chairman

      • Tenure: 0.3yrs
    • Urs Rohner (60yo)

      Independent Non-Executive Director

      • Tenure: 5yrs
      • Compensation: UK£138.00k
    • Hal Barron (56yo)

      Chief Scientific Officer

      • Tenure: 2yrs
      • Compensation: UK£6.56m
    • Vivienne Cox (60yo)

      Independent Non-Executive Director

      • Tenure: 3.5yrs
      • Compensation: UK£96.00k
    • Vindi Banga (65yo)

      Senior Independent Non-Executive Director

      • Tenure: 3.7yrs
      • Compensation: UK£118.00k
    • Lynn Elsenhans (62yo)

      Independent Non-Executive Director

      • Tenure: 7.5yrs
      • Compensation: UK£321.00k
    • Iain Mackay (57yo)

      CFO & Executive Director

      • Tenure: 1yrs
    • Emma Walmsley (49yo)

      CEO & Director

      • Tenure: 2.8yrs
      • Compensation: UK£5.89m
    • Jesse Goodman (67yo)

      Independent Non-Executive Director

      • Tenure: 4yrs
      • Compensation: UK£392.00k

    Company Information

    GlaxoSmithKline plc's company bio, employee growth, exchange listings and data sources


    Key Information

    • Name: GlaxoSmithKline plc
    • Ticker: GSK
    • Exchange: LSE
    • Founded: 1715
    • Industry: Pharmaceuticals
    • Sector: Pharmaceuticals & Biotech
    • Market Cap: UK£90.976b
    • Shares outstanding: 4.95b
    • Website: https://www.gsk.com

    Number of Employees


    Location

    • GlaxoSmithKline plc
    • 980 Great West Road
    • Brentford
    • Middlesex
    • TW8 9GS
    • United Kingdom

    Listings

    TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
    GLAX.FOTCPK (Pink Sheets LLC)YesCommon StockUSUSDJan 1975
    GS7DB (Deutsche Boerse AG)YesCommon StockDEEURJan 1975
    GSKLSE (London Stock Exchange)YesCommon StockGBGBPJan 1975
    GS7XTRA (XETRA Trading Platform)YesCommon StockDEEURJan 1975
    GSKLBATS-CHIXE (BATS 'Chi-X Europe')YesCommon StockGBGBPJan 1975
    GSKSWX (SIX Swiss Exchange)YesCommon StockCHCHFJan 1975
    GSKNYSE (New York Stock Exchange)ADR EACH CNV INTO 2 ORD GBP0.25USUSDDec 1993
    GSK NBMV (Bolsa Mexicana de Valores)ADR EACH CNV INTO 2 ORD GBP0.25MXMXNDec 1993
    GS7ADB (Deutsche Boerse AG)ADR EACH CNV INTO 2 ORD GBP0.25DEEURDec 1993
    GSKBASE (Buenos Aires Stock Exchange)CEDEAR EACH REPR 1/4 ADRARARSSep 2000

    Biography

    GlaxoSmithKline plc 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. It operates through four segments: Pharmaceuticals, Pharmaceuticals R&D, Vaccines, and Consumer Healthcare. The company offers pharmaceutical products comprising medicines in the therapeutic areas, such as respiratory, HIV, immuno-inflammation, anti-virals, central nervous system, cardiovascular and urogenital, metabolic, anti-bacterials, and dermatology. It also provides consumer healthcare products in wellness, oral health, nutrition, and skin health categories primarily under the Sensodyne, parodontax, Poligrip, Voltaren, Panadol, Otrivin, and Theraflu brand names. The company offers its consumer healthcare products in the form of nasal sprays, tablets, syrups, pods, lozenges, gum and trans-dermal patches, caplets, infant syrup drops, gels, effervescents, toothpastes, toothbrushes, mouthwashes, denture adhesives and cleansers, topical creams and non-medicated patches, and malted drinks and foods. It has collaboration agreements with 23andMe; Liquidia Technologies, Inc.; SpringWorks Therapeutics, Inc.; Merck KGaA.; Lyell Immunopharma; and Viome. GlaxoSmithKline plc was founded in 1715 and is headquartered in Brentford, the United Kingdom. 


    Company Analysis and Financial Data Status

    All financial data provided by Standard & Poor's Capital IQ.
    DataLast Updated (UTC time)
    Company Analysis2020/01/20 20:44
    End of Day Share Price2020/01/20 00:00
    Earnings2019/09/30
    Annual Earnings2018/12/31


    Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.