GlaxoSmithKline (GSK) Rising Before The Market Opens

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

Trade-Ideas LLC identified GlaxoSmithKline ( GSK) as a pre-market leader candidate. In addition to specific proprietary factors, Trade-Ideas identified GlaxoSmithKline as such a stock due to the following factors:

  • GSK has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $190.5 million.
  • GSK traded 82,069 shares today in the pre-market hours as of 8:20 AM.
  • GSK is up 2.2% today from yesterday's close.

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More details on GSK:

GlaxoSmithKline plc creates, discovers, develops, manufactures, and markets pharmaceutical products, including vaccines, over-the-counter medicines, and health-related consumer products worldwide. The stock currently has a dividend yield of 5.7%. GSK has a PE ratio of 15.8. Currently there are 2 analysts that rate GlaxoSmithKline a buy, 1 analyst rates it a sell, and 5 rate it a hold.

The average volume for GlaxoSmithKline has been 3.5 million shares per day over the past 30 days. GlaxoSmithKline has a market cap of $123.1 billion and is part of the health care sector and drugs industry. Shares are up 7.6% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates GlaxoSmithKline as a buy. The company's strengths can be seen in multiple areas, such as its expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • The gross profit margin for GLAXOSMITHKLINE PLC is currently very high, coming in at 71.15%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, GSK's net profit margin of 16.06% significantly trails the industry average.
  • GLAXOSMITHKLINE PLC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, GLAXOSMITHKLINE PLC reported lower earnings of $1.77 versus $3.68 in the prior year. This year, the market expects an improvement in earnings ($91.41 versus $1.77).
  • GSK, with its decline in revenue, underperformed when compared the industry average of 11.1%. Since the same quarter one year prior, revenues fell by 35.4%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness 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.
  • The share price of GLAXOSMITHKLINE PLC has not done very well: it is down 16.66% 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.

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