Doc Phil asked in Business & FinanceInvesting · 7 years ago

astra zeneca or azn, pe of 10.6 and dividend of 8%?

i can't find anything real negative for this company. other pharmaceutical companies have pe's about twice as high and pay 2 - 3% dividends. someone said it is a foreign company but hey ge makes 50% of it's money overseas so i don't see why it makes a big difference where it's headquartered. it gets it's money from around the world. they said it is an adr. i don't know what that is or why it is a bad thing. could some one give me a little insite as to why this is a bad thing and why this stock is not priced a lot higher

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  • 7 years ago
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    one of the problems potentially is that the the share price is influenced by the exchange rate with the home country...in this case England...so you have the fortunes of the company itself PLUS the effects of the BP/USD exchange rate.

    You can see this in these two charts

    this is the ADS version on the NYSE in USD

    http://stockcharts.com/h-sc/ui?s=AZN&p=D&yr=0&mn=6...

    this is the same company on the London exchange

    http://www.barchart.com/chart.php?sym=AZN.LS&style...

    As you can see, the two charts basically track each other but there are differences lately

    1) Moving averages versus price

    See how the London price is approaching the 50 day MA after passing the 20dayMA whereas the American prices are no where near passes the 20day MA

    2) MACD

    The London chart is bullish....the American chart thinks about it

    3. RSI

    Both are mildly bullish

    4. ADX DI+/-

    London chart has a bullish cross the American chart is bearishly neutral

    Why is there a difference when the two stocks are for the same company??? It is the exchange rate difference between the British pound and the US Dollar

    http://stockcharts.com/h-sc/ui?s=$XBP&p=D&yr=0&mn=...

    See the drop of the British pound compared to the US dollar.....that is factored into the price of the ADS stock

    So you are not only dealing with the fortunes of the company but also the strength of the currency of the country it is based in.

    Hope this helps

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