The calculations below outline how an intrinsic value for
Johnson & Johnson
is arrived at by discounting future cash flows to their present value. We use
analyst's estimates of cash flows going forward 5 years.
See our documentation to learn about this calculation.
|Levered FCF (USD, Millions)||$9,919.94||$19,681.07||$20,632.83||$20,369.00||$20,973.50|
|Source||Analyst x5||Analyst x6||Analyst x5||Analyst x2||Analyst x2|
Discounted (@ 8.49%)
Present value of next 5 years cash flows:
Terminal Value = FCF2021 × (1 + g) ÷ (Discount Rate – g)
Terminal Value = $20,974 × (1 + 2.47%) ÷ (8.49% – 2.47%)
Terminal value based on the Perpetuity Method where growth (g) =
Present value of terminal value:
Equity Value (Total value) = Present value of next 5 years cash flows +
$308,004 = $70,673 + $237,331
Value = Total value / Shares Outstanding ($308,004 / 2,687)Discount to Share Price
Value per share:
Current discount (share price of $138.34): -20.67%
The discount rate, or required rate of return, is estimated by calculating the Cost of Equity.
Discount rate = Cost of Equity = Risk Free Rate + (Levered Beta * Equity Risk Premium)
Discount rate = 8.49% = 2.47% + (0.8 * 7.53%)
The Levered Beta is the Unlevered Beta adjusted for financial leverage. It is limited to 0.8 to 2.0 (practical range for a stable firm). Note the market value of equity is used not the book value ($371,653,183,717).
Levered Beta = Unlevered beta (1 + (1- tax rate) (Debt/Equity))
0.752 = 0.705 (1 + (1- 30%) (9.52%))
Levered Beta used in calculation = 0.8
Purchase Johnson & Johnson on or before the 'Buy Limit' to receive their next dividend payment.
Mr. Alex Gorsky has been the Chairman and Chief Executive Officer of Johnson & Johnson since December 28, 2012 and April 26, 2012 respectively. Mr. Gorsky served as the Chief Operating Officer and Head of General Medicines at Novartis Pharmaceuticals Corporation from May 2004 to February 2008. He also served as the Chief Executive Officer of Novartis Pharmaceuticals from 2005 to February 2008 and as its Head of Pharma North America since 2005. He was responsible for North American pharmaceutical operations of NPC which includes both the United States and Canada. He served as Chief Executive of U.S at Novartis Corporation until February 2008. He served as Head of USA Pharmaceutical Business at Novartis AG until April 2008. He served as Worldwide Chairman of Surgical Care Group at Johnson & Johnson since January 1, 2009 until September 2009. He served for 15 years in various sales, marketing and management roles with Janssen Pharmaceutica, a Johnson & Johnson unit. He first joined Johnson & Johnson in 1988. In 2001, he was appointed President of Janssen's U.S. operations/president of Janssen Pharmaceutical Inc. As leader of Janssen's management board, Mr. Gorsky had responsibility for all of its functional areas, including: administration and community affairs; finance; human resources; information management; marketing; medical affairs; public relations; sales and process excellence. He began his pharmaceutical career as a sales representative and held various roles of increasing responsibility in sales, marketing and general management. He also oversaw the launches of Aciphex(R), a proton pump inhibitor for GI disorders and Reminyl(R), a treatment for Alzheimer's disease. Mr. Gorsky left Johnson & Johnson in 2004 to join the Novartis Pharmaceuticals Corporation. He served as Worldwide Chairman of the Surgical Care Group at Johnson & Johnson since 2009 and Worldwide Chairman of the Medical Devices and Diagnostics Group since September 2009. He served as Company Group Chairman of Johnson & Johnson's pharmaceutical business in Europe, the Middle East and Africa since 2003. He served for six years in the U.S. Army, finishing his career with the rank of Captain. During that same time, he earned the Ranger Tab, Airborne Wings and served in Europe, the United States and Panama. His landmark achievements at Janssen include the commercialization of blockbusters Risperdal(R), an atypical anti-psychotic medicine and Duragesic(R) for pain. Mr. Gorsky served as Company Group Chairman of for Ethicon Inc. since 2008. Mr. Gorsky has been a Director of Johnson & Johnson since April 26, 2012. He has been a Director at International Business Machines Corporation since September 1, 2014. He serves on the board of AdvaMed, the U.S. trade association for the medical device and diagnostics industry. He is an Executive Sponsor of two Johnson & Johnson affinity groups, the Women's Leadership Initiative and the Veteran's Leadership Council. He is actively involved in the National Alliance for the Mentally Ill, the National Alliance on Aging, the Philadelphia College of Pharmacy, the Doylestown Hospital Board, the Boy Scouts of America and as a Youth League Coach for Lacrosse. Mr. Gorsky also serves on the boards of the Travis Manion Foundation, the Congressional Medal of Honor Foundation, the National Academy Foundation and the Wharton Board of Overseers. He is a member of the Business Roundtable and The Business Council. A longtime advocate of diversity and inclusion, Mr. Gorsky was named the 2009 Mentor of the Year by the Healthcare Businesswomen's Association. Mr. Gorsky holds a Bachelor's of science degree from the U.S. Military Academy in West Point, N.Y., in 1982. He obtained a Master of Business Administration degree from The Wharton School of the University of Pennsylvania in 1996.
Average tenure and age of the Johnson & Johnson management team in years:
Average tenure and age of the Johnson & Johnson board of directors in years:
Johnson & Johnson, together with its subsidiaries, researches and develops, manufactures, and sells various products in the health care field worldwide. It operates through three segments: Consumer, Pharmaceutical, and Medical Devices. The Consumer segment offers baby care products under the JOHNSON’S brand; oral care products under the LISTERINE brand; beauty products under the AVEENO, CLEAN & CLEAR, DABAO, JOHNSON’S Adult, LE PETITE MARSEILLAIS, NEUTROGENA, RoC, and OGX brands; over-the-counter medicines, including acetaminophen products under the TYLENOL brand; cold, flu, and allergy products under the SUDAFED brand; allergy products under the BENADRYL and ZYRTEC brands; ibuprofen products under the MOTRIN IB brand; and acid reflux products under the PEPCID brand. This segment also provides women’s health products, such as sanitary pads under the STAYFREE and CAREFREE brands, and tampons under the o.b. brand; wound care products comprising brand adhesive bandages under the BAND-AID brand and first aid products under the NEOSPORIN brand. The Pharmaceutical segment offers various products in the areas of immunology, infectious diseases and vaccines, neuroscience, oncology, and cardiovascular and metabolic diseases. The Medical Devices segment provides orthopaedic products; general surgery, biosurgical, endomechanical, and energy products; electrophysiology products to treat cardiovascular disease; sterilization and disinfection products to reduce surgical infection; diabetes care products that include blood glucose monitoring and insulin delivery products; and disposable contact lenses. The company markets its products to general public, retail outlets and distributors, wholesalers, hospitals, and health care professionals for prescription use, as well as for use in the professional fields by physicians, nurses, hospitals, eye care professionals, and clinics. Johnson & Johnson was founded in 1885 and is based in New Brunswick, New Jersey.
|Name:||Johnson & Johnson|
Johnson & Johnson
One Johnson & Johnson Plaza,
New Jersey, 08933,
|Exchange Symbol||Ticker Symbol||Security||Exchange||Country||Currency||Listed on|
|NYSE||JNJ||Common Stock||New York Stock Exchange||US||USD||02. Jan 1968|
|DB||JNJ||Common Stock||Deutsche Boerse AG||DE||EUR||02. Jan 1968|
|XTRA||JNJ||Common Stock||XETRA Trading Platform||DE||EUR||02. Jan 1968|
|SWX||JNJ||Common Stock||SIX Swiss Exchange||CH||CHF||02. Jan 1968|
|SWX||JNJ||Common Stock||SIX Swiss Exchange||CH||CHF||02. Jan 1968|
|WBAG||JNJ||Common Stock||Wiener Boerse AG||AT||EUR||02. Jan 1968|
|SNSE||JNJ||Common Stock||Santiago Stock Exchange||CL||USD||02. Jan 1968|
|BVC||JNJ||Common Stock||Bolsa de Valores de Colombia||CO||COP||02. Jan 1968|
|BMV||JNJ *||Common Stock||Bolsa Mexicana de Valores||MX||MXN||02. Jan 1968|
|BVL||JNJ||Common Stock||Bolsa de Valores de Lima||PE||USD||02. Jan 1968|
|BATS-CHIXE||JNJZ||Common Stock||BATS 'Chi-X Europe'||GB||CHF||02. Jan 1968|
|BOVESPA||JNJB34||BDR EA REPR 1 COM SHS||Bolsa de Valores de Sao Paulo||BR||BRL||24. Aug 2012|
|BASE||JNJ||CEDEAR EACH REP O.20 ORD SHS||Buenos Aires Stock Exchange||AR||ARS||18. Jan 2001|
|Sector:||Pharmaceuticals, Biotechnology and Life Sciences|