AstraZeneca vs GSK Which Should You Buy?

AstraZeneca and GlaxoSmithKline (GSK) are two prominent pharmaceutical companies that are often compared in terms of their stocks' performance. Both companies are major players in the healthcare industry, with a focus on producing innovative drugs and treatments. Investors interested in the pharmaceutical sector may be drawn to these stocks for their potential for growth and stability. This comparison will delve into the financial performance, market trends, and potential future prospects of AstraZeneca and GSK stocks to provide insights for potential investors.

AstraZeneca or GSK?

When comparing AstraZeneca and GSK, different investors may prioritize various metrics based on their investment strategies and goals. So, ask yourself what type of investor you are. This will guide you in determining which metrics are most important for your investment decision between AstraZeneca and GSK.

Dividend Investors:

Dividend investors look for stable and growing income streams, using dividend metrics to assess potential investments. A company's dividend yield essentially measures the size of its dividend relative to the total market value of the company. AstraZeneca has a dividend yield of 2.2%, while GSK has a dividend yield of 4.56%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. AstraZeneca reports a 5-year dividend growth of 0.42% year and a payout ratio of 71.25%. On the other hand, GSK reports a 5-year dividend growth of -4.37% year and a payout ratio of 95.58%.

Value Investors:

Value investors focus on financial metrics to determine a stock's intrinsic value compared to its market value. The Price-to-Earnings (P/E) Ratio links stock price to a company's earnings per share, with AstraZeneca P/E ratio at 31.95 and GSK's P/E ratio at 21.91. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. AstraZeneca P/B ratio is 5.10 while GSK's P/B ratio is 3.93.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, AstraZeneca has seen a 5-year revenue growth of 0.70%, while GSK's is -0.53%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with AstraZeneca's ROE at 16.57% and GSK's ROE at 18.08%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $66.92 for AstraZeneca and $34.08 for GSK. Over the past year, AstraZeneca's prices ranged from $60.47 to $87.68, with a yearly change of 45.00%. GSK's prices fluctuated between $32.83 and $45.93, with a yearly change of 39.90%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.