Is Glaxosmithkline expensive at 1630p?

Glaxosmithkline (LON:GSK) is a giant of the Pharmaceuticals industry, with a market cap of £81.2bn and annual sales of c£30bn. The global healthcare company operates through three segments: Pharmaceuticals, Vaccines and Consumer Healthcare.

Recent trading has been positive for the group, with sales up 6% and net income up 51% for the three months to 31 March 2019. However, Glaxosmithkline's share price is on the expensive side, in our view, based on its Value Rank of 45. Let's see why this is.

A closer look at Glaxosmithkline's Value Rank

We can see by using Glaxosmithkline’s StockReport that the group has a:

• Rolling price to book value of 20.2,
• Trailing twelve month price to earnings ratio of 13.8
• Trailing twelve month price to free cashflow of 12.5
• Rolling dividend yield of 4.91%
• Trailing twelve-month price to sales ratio of 2.60

This combination of financial traits suggests that Glaxosmithkline stock is toward the more expensive end of the market. Being expensive is not the end of the world, of course - but it does help to have favourable exposures to other factors to justify the share price premium.

What does this mean for potential investors?

Some of the best quality stocks in the market have defensible models that can deliver high levels of shareholder returns over the long term. But there are no guarantees and it's important to do your own research. Indeed, we've identified some areas of concern with GSK that you can find out about here.