Why GlaxoSmithKline (GSK) Stock Is Higher Today

NEW YORK (TheStreet) -- Shares of GlaxoSmihtKline (GSK) are slightly higher in pre-market trade after the drugmaker's CEO Sir Andrew Witty opened the possibility of the group being broken up in the future as he pushes through a sweeping overhaul, the Financial Times reports.

Witty said GSK had the option to spin off its consumer healthcare business if a time came when it offered more value as a standalone company.

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TheStreet Ratings team rates GLAXOSMITHKLINE PLC as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:

"We rate GLAXOSMITHKLINE PLC (GSK) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its notable return on equity and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Pharmaceuticals industry and the overall market, GLAXOSMITHKLINE PLC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • GLAXOSMITHKLINE PLC's earnings per share declined by 26.1% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, GLAXOSMITHKLINE PLC increased its bottom line by earning $3.68 versus $2.92 in the prior year. This year, the market expects an improvement in earnings ($100.16 versus $3.68).
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 6.3%. Since the same quarter one year prior, revenues slightly dropped by 1.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The gross profit margin for GLAXOSMITHKLINE PLC is currently very high, coming in at 70.72%. Regardless of GSK's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 11.43% trails the industry average.
  • Net operating cash flow has decreased to $1,350.10 million or 48.16% when compared to the same quarter last year. Despite a decrease in cash flow of 48.16%, GLAXOSMITHKLINE PLC is in line with the industry average cash flow growth rate of -54.80%.
  • You can view the full analysis from the report here: GSK Ratings Report

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