GSK plc (NYSE: GSK)

Sector: Healthcare Industry: Drug Manufacturers - General CIK: 0001131399
Market Cap 119.53 Bn
P/B 5.40
P/E 15.47
P/S 2.71
ROIC (Qtr) 12.78
Div Yield % 2.83
Rev 1y % (Qtr) 14.78
Total Debt (Qtr) 23.95 Bn
Debt/Equity (Qtr) 1.08

About

GSK plc, known in the market as GlaxoSmithKline, is a prominent player in the pharmaceutical industry. Its operations span the development, manufacturing, and marketing of pharmaceuticals, vaccines, and consumer healthcare products. The company's diverse product portfolio is marketed in over 150 countries, making it a global entity in the healthcare sector. GSK's primary revenue generation comes from the sale of its pharmaceuticals, vaccines, and consumer healthcare products. Its pharmaceuticals segment, which accounts for approximately 60% of...

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Price action

Investment thesis

Bull case

  • Strong operating cash flow of 10.46B provides robust 0.44x coverage of total debt 23.95B, indicating excellent debt servicing capability and financial flexibility.
  • Operating cash flow of 10.46B provides exceptional 11.04x coverage of interest expenses 947.30M, showing strong debt service capability.
  • Robust free cash flow of 8.67B exceeds capital expenditure of 1.79B by 4.85x, indicating strong organic growth funding capability.
  • Free cash flow of 8.67B provides exceptional 9.15x coverage of interest expense 947.30M, showing strong debt service ability.
  • Tangible assets of 50.48B provide robust 12.46x coverage of other current liabilities 4.05B, indicating strong asset backing.

Bear case

  • Operating cash flow of 10.46B barely covers its investment activities of (5.72B), with a coverage ratio of -1.83, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Investment activities of (5.72B) provide weak support for R&D spending of 10.17B, which is -0.56x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Operating cash flow of 10.46B provides thin coverage of dividend payments of (3.46B) with a -3.02 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 4.59B provide limited coverage of acquisition spending of (2.26B), which is -2.04x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Operating earnings of 10.17B show weak coverage of depreciation charges of 5.11B, with a 1.99 ratio indicating high capital intensity and potential reinvestment needs.

Categories of related parties [axis] Breakdown of Revenue (2024)

Segments [axis] Breakdown of Revenue (2024)

Peer comparison

Companies in the Drug Manufacturers - General
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 LLY ELI LILLY & Co 940.24 Bn 84.66 19.19 42.51 Bn
2 JNJ Johnson & Johnson 656.09 Bn 49.20 10.65 45.80 Bn
3 AMGN Amgen Inc 389.67 Bn 89.91 26.60 54.59 Bn
4 ABBV AbbVie Inc. 363.54 Bn 129.05 16.59 68.74 Bn
5 MRK Merck & Co., Inc. 320.49 Bn 202.84 7.87 41.37 Bn
6 NVS Novartis Ag 304.60 Bn 21.78 5.37 35.46 Bn
7 AZN Astrazeneca Plc 291.12 Bn 30.97 5.01 32.63 Bn
8 NVO Novo Nordisk A S 219.30 Bn 13.62 4.51 20.59 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 2.18 2.39
EV to Cash from Ops. EV/CFO 17.24 27.43
EV to Debt EV to Debt 7.53 6.41
EV to EBIT EV/EBIT 17.72 29.56
EV to EBITDA EV/EBITDA 11.40 21.95
EV to Free Cash Flow [EV/FCF] EV/FCF 20.79 39.77
EV to Market Cap EV to Market Cap 1.51 1.28
EV to Revenue EV/Rev 4.08 7.09
Price to Book Value [P/B] P/B 5.40 12.10
Price to Earnings [P/E] P/E 15.47 73.51
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 3.01 0.92
Dividend Payout Ratio % Div Payout % (Qtr) 43.90 65.92
Dividend per Basic Share Div per Share (Qtr) 1.67 2.81
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 52.62 37.42
Interest Coverage Int. cover (Qtr) 10.74 20.26
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -7.30 -9.54
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -5.11 96.72
Dividend Growth (1y) % Div 1y % (Qtr) 7.51 2.18
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 117.66 74.22
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 80.69 29.18
EBIT Growth (1y) % EBIT 1y % (Qtr) 115.90 66.23
EBT Growth (1y) % EBT 1y % (Qtr) 138.04 310.53
EPS Growth (1y) % EPS 1y % (Qtr) 141.36 352.41
FCF Growth (1y) % FCF 1y % (Qtr) 32.90 47.43
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 14.51 8.06
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.72 0.38
Cash Payout Ratio Cash Payout (Qtr) 0.28 0.27
Cash Ratio Cash Ratio (Qtr) 0.16 2.11
Current Ratio Curr Ratio (Qtr) 0.82 6.17
Debt to Equity Ratio Debt/Equity (Qtr) 1.08 -0.40
Interest Cover Ratio Int Coverage (Qtr) 10.74 20.26
Times Interest Earned Times Interest Earned (Qtr) 10.74 20.26
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 34.60 -13.61
EBIT Margin % EBIT Margin % (Qtr) 17.06 -10.56
EBT Margin % EBT Margin % (Qtr) 20.90 -25.71
Gross Margin % Gross Margin % (Qtr) 72.40 64.91
Net Profit Margin % Net Margin % (Qtr) 17.50 -34.99