How the Wheels Came off GlaxoSmithKline's Bus

Seth Jayson, The Motley Fool
Updated

GlaxoSmithKline (NYS: GSK) reported earnings on Feb. 7. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q4), GlaxoSmithKline missed estimates on revenues and whiffed on earnings per share.

Compared to the prior-year quarter, revenue contracted and GAAP earnings per share expanded.

Gross margins dropped, operating margins contracted, net margins improved.

Revenue details
GlaxoSmithKline booked revenue of $10.86 billion. The 12 analysts polled by S&P Capital IQ expected a top line of $11.42 billion. GAAP sales were 3.3% lower than the prior-year quarter's $11.24 billion.

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Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $0.39. The three earnings estimates compiled by S&P Capital IQ predicted $0.78 per share. GAAP EPS were $0.39 for Q4 against -$0.21 per share for the prior-year quarter.

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Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 72.8%, 150 basis points worse than the prior-year quarter. Operating margin was 26.9%, 2,960 basis points worse than the prior-year quarter. Net margin was 17.9%, 2,750 basis points better than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $11.01 billion.

Next year's average estimate for revenue is $45.43 billion. The average EPS estimate is $3.52.

Investor sentiment
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 21 members out of 25 rating the stock outperform, and four members rating it underperform. The one CAPS All-Star pick (recommendations by the highest-ranked CAPS members) gives GlaxoSmithKline a green thumbs-up.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on GlaxoSmithKline is outperform, with an average price target of $49.65.

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At the time thisarticle was published Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor ofMotley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Motley Fool newsletter services have recommended buying shares of GlaxoSmithKline. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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