GlaxoSmithKline plc
GlaxoSmithKline plc Fundamental Analysis
GlaxoSmithKline plc (GSK.SW) shows moderate financial fundamentals with a PE ratio of 15.30, profit margin of 16.78%, and ROE of 38.37%. The company generates $37.4B in annual revenue with moderate year-over-year growth of 3.46%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 42.7/100 based on profitability, valuation, growth, and balance sheet metrics. The D grade reflects weak fundamentals and significant financial concerns.
Fundamental Health Score
We analyze GSK.SW's fundamental strength across five key dimensions:
Efficiency Score
WeakGSK.SW struggles to generate sufficient returns from assets.
Valuation Score
ExcellentGSK.SW trades at attractive valuation levels.
Growth Score
WeakGSK.SW faces weak or negative growth trends.
Financial Health Score
WeakGSK.SW carries high financial risk with limited liquidity.
Profitability Score
ExcellentGSK.SW achieves industry-leading margins.
Key Financial Metrics
Is GSK.SW Expensive or Cheap?
P/E Ratio
GSK.SW trades at 15.30 times earnings. This indicates a fair valuation.
PEG Ratio
When adjusting for growth, GSK.SW's PEG of 0.16 indicates potential undervaluation.
Price to Book
The market values GlaxoSmithKline plc at 7.10 times its book value. This suggests the stock is fully valued or overvalued on an asset basis.
EV/EBITDA
Enterprise value stands at 8.96 times EBITDA. This is generally considered low.
How Well Does GSK.SW Make Money?
Net Profit Margin
For every $100 in sales, GlaxoSmithKline plc keeps $16.78 as profit after all expenses.
Operating Margin
Core operations generate 56.41 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $38.37 in profit for every $100 of shareholder equity.
ROA
GlaxoSmithKline plc generates $8.18 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
GlaxoSmithKline plc generates strong operating cash flow of $9.45B, reflecting robust business health.
Free Cash Flow
GlaxoSmithKline plc generates strong free cash flow of $6.57B, providing ample flexibility for dividends, buybacks, or growth.
FCF Per Share
Each share generates $1.29 in free cash annually.
FCF Yield
GSK.SW converts 5.35% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
15.30
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
0.16
vs 25 benchmark
P/B Ratio
Price to book value ratio
7.10
vs 25 benchmark
P/S Ratio
Price to sales ratio
3.28
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
1.98
vs 25 benchmark
Current Ratio
Current assets to current liabilities
0.91
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
0.38
vs 25 benchmark
ROA
Return on assets percentage
0.08
vs 25 benchmark
ROCE
Return on capital employed
0.44
vs 25 benchmark
How GSK.SW Stacks Against Its Sector Peers
| Metric | GSK.SW Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 15.30 | 28.45 | Better (Cheaper) |
| ROE | 38.37% | 763.00% | Weak |
| Net Margin | 16.78% | -45266.00% (disorted) | Strong |
| Debt/Equity | 1.98 | 0.34 | Weak (High Leverage) |
| Current Ratio | 0.91 | 2795.60 | Weak Liquidity |
| ROA | 8.18% | -16586.00% (disorted) | Weak |
GSK.SW outperforms its industry in 2 out of 6 key metrics, particularly excelling in Net Margin, but lagging in ROE.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews GlaxoSmithKline plc's 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
-9.77%
Industry Style: Defensive, Growth, Innovation
DecliningEPS CAGR
-46.19%
Industry Style: Defensive, Growth, Innovation
DecliningFCF CAGR
-20.67%
Industry Style: Defensive, Growth, Innovation
Declining