NEW YORK (TheStreet) -- GlaxoSmithKline (GSK) shares closed trading up 0.8% to $47.03 on Wednesday after reports that the company was planning to name Philip Hampton, chairman of the Royal Bank of Scotland (RBS) as its non-executive chairman by this weekend, according to Bloomberg.
Hampton would replace current chairman Christopher Gent, who announced in May that he would not be serving on the board past next year.
GlaxoSmithKline has experienced a turbulent year so far as disappointing drug sales, and a Chinese bribery scandal that resulted in a $489 million fine, has caused the stock to decline.STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.
TheStreet Ratings team rates GLAXOSMITHKLINE PLC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate GLAXOSMITHKLINE PLC (GSK) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. 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 ($97.40 versus $3.68).
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 4.7%. 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.
- The share price of GLAXOSMITHKLINE PLC has not done very well: it is down 7.77% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.
- You can view the full analysis from the report here: GSK Ratings Report