AstraZeneca plc (AZN): How Does It Stack Up?

How does AstraZeneca’s dividend prospects rate against the competition?

Source: Digital Look.

AstraZeneca plc (LON:AZN) currently trades on a P/E readout of 9.9 for 2013, substantially below the comparative readings for both the wider pharmaceuticals space and the FTSE 100. Although a handful of rival pharma plays have distorted the group valuation, the firm still looks relatively cheap at face value versus its major peers.

In my opinion AstraZeneca plc (LON:AZN)’s lowly price rating is justified, however, as an absence of meaty product development, combined with patent expiry in a number of areas, look set to keep the balance sheet under the cosh.

Although the firm has said that it “intends to maintain or grow the dividend each year,” and the dividend yield is predicted to remain comfortably above 5% this year and next, a worsening earnings outlook could put future payments in jeopardy in my opinion. I believe that juicy dividend payers carrying less risk can be sought elsewhere.

The expert’s guide for intelligent investors
Although AstraZeneca plc (LON:AZN) currently presents too much risk in my opinion, this newly updated special report which highlights a host of other FTSE winners identified by ace fund manager Neil Woodford.

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The article A Closer Look at AstraZeneca’s Dividend Potential originally appeared on Fool.com and is written by Royston Wild.

Fool contributor Royston Wild has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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