Is Gilead Science A Potential Buy?

Today I will have another brief look on my must buys for 2019. In the last two posts I had a look at PRU and ITW both companies I will add this year. The other one was Gilead Science, a pharma company which is struggling in the last year and the share price is now a level where I would consider to buy some shares. So let’s have a look at the current valuation.

Overview

Gilead Sciences develops and markets therapies to treat life-threatening infectious diseases, with the core of its portfolio, focused on HIV and hepatitis B and C. The acquisitions of Corus Pharma, Myogen, CV Therapeutics, Arresto Biosciences, and Calistoga have broadened this focus to include pulmonary and cardiovascular diseases and cancer. Gilead’s acquisition of Pharmasset brought rights to hepatitis C drug Sovaldi, which is also part of combination drug Harvoni, and the Kite acquisition boosted Gilead’s exposure to cell therapy in oncology.

Dividend Data

GILD has quite a short dividend history and has only increased its dividend for 3 years, and pays a dividend since 2015. Given the age of the company and the growth, GILD is in a lot of eyes a candidate of future dividend aristocrat.

Dividend: Currently the company pays a yearly dividend of 2.52 USD, which equals a yield of 3.85%. The latest dividend increase was at 10.5%, which is quite above my goal of having a yearly increase of 7.5%.

Payout Ratio: The current payout ratio is at 38.5%, which is on a very healthy level and leaves enough room for future growth.

Stock Price

The share price of GILD is down by almost 19%% on a yearly basis. This fact makes the stock look quite cheap at the moment with a price of 66.00 USD.

Valuation

Price/Earning: The current P/E ratio is currently at 15.68, the 5 year average is at 18.00. So based on the P/E the company seems to be below the average price level of the last 5 years, which is not super cheap but ok for now.

Price/Book: Similar to the P/E ratio, the price/book ratio is also above the 5 year average. The current P/B ratio is at 3.67 compared to its 5 year average of 7.03.

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Disclosure: I do not recommend any decision to the reader or any user, please consult your own research. Thank you for your understanding!

Disclaimer: I wrote this article myself, and it ...

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