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GlaxoSmithKline (GSK) Dips More Than Broader Markets: What You Should Know

Zacks Equity Research
·3 min read

GlaxoSmithKline (GSK) closed at $35.35 in the latest trading session, marking a -1.91% move from the prior day. This move lagged the S&P 500's daily loss of 0.22%. At the same time, the Dow lost 0.35%, and the tech-heavy Nasdaq lost 0.28%.

Coming into today, shares of the drug developer had lost 5.16% in the past month. In that same time, the Medical sector lost 2.05%, while the S&P 500 gained 3.82%.

Wall Street will be looking for positivity from GSK as it approaches its next earnings report date. On that day, GSK is projected to report earnings of $0.78 per share, which would represent a year-over-year decline of 17.89%. Meanwhile, our latest consensus estimate is calling for revenue of $11.31 billion, down 2.23% from the prior-year quarter.

GSK's full-year Zacks Consensus Estimates are calling for earnings of $2.98 per share and revenue of $44.62 billion. These results would represent year-over-year changes of -5.99% and +3.66%, respectively.

Investors might also notice recent changes to analyst estimates for GSK. These recent revisions tend to reflect the evolving nature of short-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 0.82% lower. GSK is holding a Zacks Rank of #3 (Hold) right now.

In terms of valuation, GSK is currently trading at a Forward P/E ratio of 12.08. Its industry sports an average Forward P/E of 14.02, so we one might conclude that GSK is trading at a discount comparatively.

It is also worth noting that GSK currently has a PEG ratio of 2.83. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. GSK's industry had an average PEG ratio of 1.91 as of yesterday's close.

The Large Cap Pharmaceuticals industry is part of the Medical sector. This group has a Zacks Industry Rank of 169, putting it in the bottom 34% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.


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