Johnson & Johnson, together with its subsidiaries, researches and develops, manufactures, and sells various products in the health care field worldwide. More info.
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)||$19,512.75||$21,799.84||$21,823.00||$21,999.66||$22,177.74|
|Source||Analyst x5||Analyst x3||Analyst x2||Extrapolated @ (0.81%)||Extrapolated @ (0.81%)|
Discounted (@ 8.49%)
Present value of next 5 years cash flows:
Terminal Value = FCF2022 × (1 + g) ÷ (Discount Rate – g)
Terminal Value = $22,178 × (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 +
$335,182 = $84,225 + $250,958
Value = Total value / Shares Outstanding ($335,182 / 2,683)Discount to Share Price
Value per share:
Current discount (share price of $132.02): -5.67%
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 ($348,535,740,750).
Levered Beta = Unlevered beta (1 + (1- tax rate) (Debt/Equity))
0.595 = 0.561 (1 + (1- 40%) (10.15%))
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:
See our latest analysis for Johnson & Johnson 5 checks you should use to assess a dividend stock If you are a dividend investor, you should always assess these five key metrics: Is it the top 25% annual dividend yield payer? … Based on future earnings growth, will it be able to continue to payout dividend at the current rate? … NYSE:JNJ Historical Dividend Yield Feb 22nd 18 How well does Johnson & Johnson fit our criteria?Simply Wall St - – Full article
JNJ is trading at a very high price-to-earnings (PE) ratio of 281.18x, meaning Johnson & Johnson is overvalued based on current earnings compared to the pharmaceuticals industry average of 23.63x , and overvalued compared to the US market average ratio of 18.99x. … However, since Johnson & Johnson is a high-growth stock, we must also account for its earnings growth by using calculation called the PEG ratio. … This means that, when we account for Johnson & Johnson's growth, the stock can be viewed as somewhat overvalued , based on the fundamentals.Simply Wall St - – Full article
See our latest analysis for Johnson & Johnson Does JNJ produce enough cash relative to debt? … Moving onto cash from operations, its small level of operating cash flow means calculating cash-to-debt wouldn't be too useful, though these low levels of cash means that operational efficiency is worth a look. … Next Steps: JNJ’s cash flow coverage indicates it could improve its operating efficiency in order to meet demand for debt repayments should unforeseen events arise.Simply Wall St - – Full article
View our latest analysis for Johnson & Johnson Breaking down Return on Equity Return on Equity (ROE) is a measure of Johnson & Johnson’s profit relative to its shareholders’ equity. … Return on Equity = Net Profit ÷ Shareholders Equity ROE is measured against cost of equity in order to determine the efficiency of Johnson & Johnson’s equity capital deployed. … This means Johnson & Johnson returns enough to cover its own cost of equity, with a buffer of 13.08%.Simply Wall St - – Full article
I am going to run you through how I calculated the intrinsic value of Johnson & Johnson (NYSE:JNJ) by taking the expected future cash flows and discounting them to today's value. … 5-year cash flow estimate 2018 2019 2020 2021 2022 Levered FCF ($, Millions) $19,671.90 $20,639.43 $20,369.00 $20,973.50 $21,506.50 Source Analyst x6 Analyst x5 Analyst x2 Analyst x2 Analyst x2 Present Value Discounted @ 8.49% $18,131.78 $17,534.21 $15,949.70 $15,137.29 $14,306.75 Present Value of 5-year Cash Flow (PVCF)= $81,060 After calculating the present value of future cash flows in the intial 5-year period we need to calculate the Terminal Value, which accounts for all the future cash flows beyond the first stage. … Terminal Value (TV) = FCF2022 × (1 + g) ÷ (r – g) = $21,507 × (1 + 2.5%) ÷ (8.5% – 2.5%) = $365,832 Present Value of Terminal Value (PVTV) = TV / (1 + r)5 = $365,832 / ( 1 + 8.5%)5 = $243,362 The total value is the sum of cash flows for the next five years and the discounted terminal value, which results in the Total Equity Value, which in this case is $324,422.Simply Wall St - – Full article
To get some insight, I will shine a light on the behaviour of Johnson & Johnson’s margins so investors can evaluate the revenue and cost drivers behind future earnings projections and understand how they may impact on returns compared to the industry. … Margin Calculation for JNJ Profit Margin = Net Income ÷ Revenue ∴ Profit Margin = 15.83 Billion ÷ 74.36 Billion = 21.28% The past five years have seen Johnson & Johnson's margin expand, with average net income growth of 8.12% outstripping a 2.14% average growth in revenue, which means that the previous increase in revenue has coincided with a larger portion falling to the bottom line. … Understanding what could be driving Johnson & Johnson's future earnings It is expected that margins will expand further, with an expectation of 3.70% in annual revenue growth and 6.60% earnings growth expected annually.Simply Wall St - – Full article
In this commentary, I will examine Johnson & Johnson's (NYSE:JNJ) latest earnings update (01 October 2017) and compare these figures against its performance over the past couple of years, as well as how the rest of the pharmaceuticals industry performed. … View our latest analysis for Johnson & Johnson How Did JNJ's Recent Performance Stack Up Against Its Past? … This means that, on average, Johnson & Johnson has been able to increase its earnings over the last couple of years.Simply Wall St - – Full article
Below, I've laid out key numbers on how market analysts predict Johnson & Johnson's earnings growth trajectory over the next couple of years and whether the future looks even brighter than the past. … The benefit of this approach is that we can get a better picture of the direction of Johnson & Johnson's earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. … This means, we can assume Johnson & Johnson will grow its earnings by 8.65% every year for the next couple of years.Simply Wall St - – Full article
Since Johnson & Johnson (NYSE:JNJ) released its earnings in October 2017, the consensus outlook from analysts appear fairly confident, as a 17.22% increase in profits is expected in the upcoming year, compared with the past 5-year average growth rate of 7.38%. … To understand the overall trajectory of JNJ's earnings growth over these next fews years, I've fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope. … NYSE:JNJ Future Profit Dec 12th 17 From the current net income level of $16,540.0M and the final forecast of $22,198.0M by 2020, the annual rate of growth for JNJ’s earnings is 8.63%.Simply Wall St - – Full article
Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. … With Johnson & Johnson producing strong dividend income for your portfolio over the past few years, you can take comfort in knowing that this stock will still continue to be a robust dividend generator moving forward. … Taking into account the dividend metrics, Johnson & Johnson ticks most of the boxes as a strong dividend investment, putting it in my list of top dividend payers.Simply Wall St - – Full article
Johnson & Johnson, together with its subsidiaries, researches and develops, manufactures, and sells various products in the health care field worldwide. Its 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 adhesive bandages under the BAND-AID brand and first aid products under the NEOSPORIN brand. The company’s Pharmaceutical segment offers various products in the areas of immunology, infectious diseases and vaccines, neuroscience, oncology, cardiovascular and metabolic, and pulmonary hypertension diseases. Its Medical Devices segment provides orthopedic 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 vision care products, such as disposable contact lenses and ophthalmic products related to cataract and laser refractive surgery. 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|
|Pharmaceuticals & Biotech|
|Company Analysis updated:||2018/02/24|
|Last estimates confirmation:||2018/02/21|
|Last earnings update:||2017/12/31|
|Last annual earnings update:||2017/12/31|
All dates in UTC. All financial data provided by Standard & Poor’s Capital IQ.
Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.