A sign of a high-quality business is not that adversity never occurs, but rather, that the core engine still remains strong even when adversity does strike. It is something that comes to mind when I study the recent performance of GlaxoSmithKline. It has been an unpopular stock for quite a few years now. It has dealt with top-level executives accused of bribery, important drugs going off patent, and a lack of clearly identifiable sources of long-term profit growth. Yet, it still has a portfolio consisting of thousands of brands that cumulatively generate 28% profit margins.
Last July, news hit that the company was dealing with bribery accusations while missing its target of expected earnings to boot. If you are someone looking for good news, GlaxoSmithKline has not been your guy. But if it is receiving profits that you are after, the story has been quite different.
Since missing its earnings … Read the rest of this article!