Contrasting GlaxoSmithKline (GSK) & Emergent Biosolutions (EBS)

GlaxoSmithKline (NYSE: GSK) and Emergent Biosolutions (NYSE:EBS) are both mid-cap healthcare companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, risk, dividends, analyst recommendations, profitability, earnings and valuation.

Risk and Volatility

GlaxoSmithKline has a beta of 0.97, meaning that its share price is 3% less volatile than the S&P 500. Comparatively, Emergent Biosolutions has a beta of 1.29, meaning that its share price is 29% more volatile than the S&P 500.

Insider and Institutional Ownership

9.7% of GlaxoSmithKline shares are held by institutional investors. Comparatively, 88.5% of Emergent Biosolutions shares are held by institutional investors. 10.0% of GlaxoSmithKline shares are held by company insiders. Comparatively, 16.5% of Emergent Biosolutions shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares GlaxoSmithKline and Emergent Biosolutions’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
GlaxoSmithKline $37.82 billion 2.56 $1.24 billion $1.35 28.92
Emergent Biosolutions $488.78 million 5.13 $51.77 million $1.60 31.74

GlaxoSmithKline has higher revenue and earnings than Emergent Biosolutions. GlaxoSmithKline is trading at a lower price-to-earnings ratio than Emergent Biosolutions, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for GlaxoSmithKline and Emergent Biosolutions, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
GlaxoSmithKline 2 8 5 0 2.20
Emergent Biosolutions 0 1 2 0 2.67

GlaxoSmithKline currently has a consensus target price of $38.33, suggesting a potential downside of 1.81%. Emergent Biosolutions has a consensus target price of $50.33, suggesting a potential downside of 0.88%. Given Emergent Biosolutions’ stronger consensus rating and higher possible upside, analysts plainly believe Emergent Biosolutions is more favorable than GlaxoSmithKline.

Profitability

This table compares GlaxoSmithKline and Emergent Biosolutions’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
GlaxoSmithKline 17.79% 461.88% 9.56%
Emergent Biosolutions 15.60% 15.20% 9.67%

Dividends

GlaxoSmithKline pays an annual dividend of $2.04 per share and has a dividend yield of 5.2%. Emergent Biosolutions does not pay a dividend. GlaxoSmithKline pays out 151.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Summary

Emergent Biosolutions beats GlaxoSmithKline on 10 of the 16 factors compared between the two stocks.

GlaxoSmithKline Company Profile

GlaxoSmithKline plc is a global healthcare company. The Company operates through three segments: Pharmaceuticals, Vaccines and Consumer Healthcare. The Company focuses on its research across six areas: Respiratory diseases, human immunodeficiency virus (HIV)/infectious diseases, Vaccines, Immuno-inflammation, Oncology and Rare diseases. The Company makes a range of prescription medicines, vaccines and consumer healthcare products. The Pharmaceuticals business discovers, develops and commercializes medicines to treat a range of acute and chronic diseases. The Vaccines business provides vaccines for people of all ages from babies and adolescents to adults and older people. The Consumer Healthcare business develops and markets products in Wellness, Oral health, Nutrition and Skin health categories. Its product portfolio includes Adartrel, Bexsero, Daraprim and Quinvaxem. Its brands include Panadol, abreva, polident and physiogel.

Emergent Biosolutions Company Profile

Emergent BioSolutions Inc. is a life sciences company. The Company focuses on protecting and enhancing life by providing specialty products for civilian and military populations that address accidental, intentional and naturally emerging public health threats. It focuses on developing, manufacturing and commercializing medical countermeasures that address public health threats (PHTs). The PHTs operates through two categories: Chemical, Biological, Radiological and Nuclear, as well as explosive-related threats and emerging infectious diseases. It operates through four business units: Vaccines and Anti-infectives; Antibody Therapeutics; Devices, and Contract Manufacturing. Vaccines and Anti-infectives business unit consists of BioThrax, which is for the general use prophylaxis and post-exposure prophylaxis of anthrax disease. Devices business unit consists of marketed products, such as Reactive Skin Decontamination Lotion Kit (RSDL) and Trobigard (atropine sulfate, obidoxime chloride).

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