Is GlaxoSmithKline plc (LSE:GSK) Undervalued?
Let’s talk about the popular GlaxoSmithKline plc (LSE:GSK). The company’s shares saw significant share price volatility over the past couple of months on the LSE, rising to the highs of £15.36 and falling to the lows of £13.08. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether GSK’s current trading price of £13.08 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at GSK’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. View our latest analysis for GlaxoSmithKline
What is GSK worth?
Good news, investors! GSK is still a bargain right now. My valuation model shows that the intrinsic value for the stock is £19.2, but it is currently trading at £13.08 on the share market, meaning that there is still an opportunity to buy now. What’s more interesting is that, GSK’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to move to its intrinsic value, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because GSK’s stock is less volatile than the wider market given its low beta.
What does the future of GSK look like?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at GSK future expectations. With profit expected to grow by 93.36% over the next couple of years, the future seems bright for GSK. It looks like higher cash flows is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? Since GSK is currently undervalued, it may be a great time to increase your holdings in the stock. With a positive outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as capital structure to consider, which could explain the current undervaluation.
Are you a potential investor? If you’ve been keeping an eye on GSK for a while, now might be the time to make a leap. Its prosperous future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy GSK. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed buy.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on GlaxoSmithKline. You can find everything you need to know about GSK in the latest infographic research report. If you are no longer interested in GlaxoSmithKline, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
