| Snowflake Score | |
|---|---|
| Valuation | 4/6 |
| Future Growth | 2/6 |
| Past Performance | 2/6 |
| Financial Health | 6/6 |
| Dividends | 5/6 |
JNJ Stock Overview
Johnson & Johnson, together with its subsidiaries, researches and develops, manufactures, and sells various products in the healthcare field worldwide.
Johnson & Johnson Competitors
Price History & Performance
| Historical stock prices | |
|---|---|
| Current Share Price | US$167.14 |
| 52 Week High | US$186.69 |
| 52 Week Low | US$155.72 |
| Beta | 0.59 |
| 1 Month Change | -4.95% |
| 3 Month Change | -5.49% |
| 1 Year Change | -4.60% |
| 3 Year Change | 28.04% |
| 5 Year Change | 25.63% |
| Change since IPO | 2,133.19% |
Recent News & Updates
Dividend Aristocrat Johnson & Johnson: One Of The Best Ideas Out There
Johnson & Johnson offers investors a combination of dividend growth and capital appreciation upside potential. The company is home to some of the best brands in the consumer health care space, a robust pharmaceutical portfolio, and an expansive slate of medical technology offerings. J&J is a robust generator of free cash flow with a healthy balance sheet and a bright growth outlook. The high end of our fair value estimate for Johnson & Johnson, derived through our enterprise cash flow analysis process, sits at $222 per share. By Valuentum Analysts The health care giant Johnson & Johnson (JNJ) offers investors a combination of capital appreciation and dividend growth upside potential, and we are big fans of the name. J&J is a Dividend Aristocrat that has increased its annual payout over the past ~60 consecutive years, a feat made possible by its stellar cash flow generating abilities, brand power, and expansive asset base within the realm of health care. Shares of JNJ yield a nice ~2.7% as of this writing. J&J's Key Investment Considerations Image Source: Valuentum J&J has built one of the most comprehensive health care businesses. The firm’s three core business operating segments are as follows: Consumer Health (which it plans to separate), Pharmaceutical, and MedTech. Its planned separation will mark the end of an era. The company was founded in 1885 and is headquartered in New Brunswick, New Jersey. Its Consumer Health segment is home to numerous top-tier brands including: TYLENOL, LISTERINE, BAND-AID, PEPCID, NEUTROGENA, NEOSPORIN, and ZYRTEC. The separation of this segment from its other operations is expected to be completed by late 2023. The company developed a vaccine for COVID-19 that secured regulatory approval from the US FDA and other agencies. However, we do not expect the vaccine to generate needle-moving revenue or profits as it is being sold on a not-for-profit basis. J&J will likely earn goodwill worldwide. J&J's TREMFYA was approved by the US FDA in 2020 to treat adult patients with active psoriatic arthritis, and sales have grown at a brisk pace in recent fiscal years. The firm's other key drugs include DARZALEX (treats certain types of blood cancer), SIMPONI (treats certain types of arthritis), and STELARA (treats moderate to severe active Crohn’s disease). An overview of the recent financial performance of the various treatments and vaccines included in J&J's pharmaceutical portfolio. (J&J - 2021 Annual Report) Earnings Update On July 19, J&J reported second quarter earnings for fiscal 2022 (period ended July 3, 2022) that beat consensus top- and bottom-line estimates. Due to headwinds facing its MedTech segment in the wake of COVID-related lockdowns in China, J&J trimmed its full-year guidance for fiscal 2022, though the company's underlying business performance remains quite strong. First, let's look at J&J's GAAP performance on a company-wide basis before breaking down the performance of each of its core business reporting segments. On a GAAP basis, J&J's revenues grew 3% year-over-year to reach $24.0 billion though its diluted EPS dropped by 23% year-over-year to hit $1.80 in the second fiscal quarter. However, please note that its provision for corporate income taxes more than doubled as a percent of sales during this period and that special items also held down its GAAP earnings. Its GAAP operating income came in at $6.2 billion in the last fiscal quarter, down just 1% year-over-year. J&J's GAAP gross margin declined by ~50 basis points year-over-year to 67.0% and its core operating expenses (‘selling, marketing and administrative expenses’ and ‘research and development expense’) rose to 41.3% of its net sales (up ~60 basis points year-over-year) in the second quarter. During the first half of fiscal 2022, J&J generated $8.1 billion in free cash flow (defined as net operating cash flow less capital expenditures) while spending $5.8 billion covering its dividend obligations and $2.6 billion buying back its stock. We are big fans of J&J's ability to generate substantial free cash flows in almost any operating environment. J&J is a stellar free cash flow generator which historically have fully covered its dividend obligations with ample room to spare. (J&J - 10-Q SEC filing covering the second quarter of fiscal 2022) J&J exited the fiscal second quarter with $32.6 billion in cash, cash equivalents, and current marketable securities on hand versus $4.3 billion in short-term debt and $28.3 billion in long-term debt on the books. The company had a largely neutral net cash/debt position (inclusive of short-term debt) at the end of the fiscal second quarter after aggressively improving its balance sheet in recent fiscal years to prepare itself for pending and potential legal liabilities (opioid crisis, talc lawsuits, and other legal liabilities). In the fiscal second quarter, J&J's adjusted operational sales jumped higher 8% year-over-year and its adjusted diluted EPS grew by 4% year-over-year during the second quarter (these are non-GAAP metrics). Adjusted operational sales were up 3% year-over-year at its Consumer Health segment. Growth in the segment was supported by its over-the-counter upper respiratory and analgesic products along with its NEUTROGENA branded beauty and skin care products selling well in international markets. Its IMODIUM digestive health branded products also sold well last fiscal quarter. Pivoting to the company's Pharmaceutical segment, adjusted operational sales in this area were up 12% year-over-year last fiscal quarter. J&J's oncology (DARZALEX, ERLEADA) treatments, STELARA treatment (treats Crohn's disease along with ulcerative colitis, plaque psoriasis, and psoriatic arthritis), and its portfolio of schizophrenia treatments (INVEGA SUSTENNA/XEPLION and INVEGA TRINZA/TREVICTA) were solid revenue generators last fiscal quarter. Additionally, the firm’s COVID-19 vaccine (Ad26.COV2.S) put up decent sales performance, albeit from subdued expectations. At J&J's MedTech segment, adjusted operational sales were up 3% year-over-year last fiscal quarter. Its contact lenses, vision surgical products, and electrophysiology products sold well in the second quarter, though J&J alluded to a slowdown in sales in China (citing “COVID-19 related mobility restrictions in certain regions” as a headwind) as holding back its performance at this segment. Here is what management had to say on the issue in response to an analyst’s question during Johnson & Johnson’s latest earnings call: Again, it gets really difficult to really draw comparisons around procedure volume because we still are dealing with the impact of COVID in the second quarter alone in China. That impacted growth and procedures were down roughly 25% with a little bit improvement towards the last month from what we saw in April and May. --- Joe Wolk, EVP and CFO of J&J As economic lockdowns in China ease up, there is room for upside at J&J's MedTech segment going forward. However, we caution that potential future economic lockdowns to contain the spread of COVID-19 in the world’s second largest economy remains a key downside risk. Guidance Update Pivoting to J&J's guidance update, the firm reduced its full-year guidance for its reported sales and EPS performance in conjunction with its latest earnings report. It narrowed the range of its adjusted operational EPS guidance but kept the midpoint the same. J&J now expects its adjusted operating income margin to be broadly flat this fiscal year versus fiscal 2021 levels (previously, the firm was guiding for a ~50 basis point expansion) with management citing “the prolonged impact of inflationary pressures” as the main culprit. The upcoming graphic down below provides an overview of J&J’s current guidance versus its previous forecasts. J&J's updated guidance as of the fiscal second quarter. (J&J - Second quarter of fiscal 2022 IR earnings presentation) J&J's Economic Profit Analysis The best measure of a company's ability to create value for shareholders is expressed by comparing its return on invested capital ['ROIC'] with its weighted average cost of capital ['WACC']. The gap or difference between ROIC and WACC is called the firm's economic profit spread. J&J's 3-year historical return on invested capital (without goodwill) is 34.1%, which is above the estimate of its cost of capital of 8.6%. J&J has historically been a stellar generator of shareholder value, and we forecast that will continue to be the case going forward. In the upcoming chart down below, we show the probable path of ROIC in the years ahead based on the estimated volatility of key drivers behind the measure. The solid grey line reflects the most likely outcome, in our opinion, and represents the scenario that results in our fair value estimate. Image Source: Valuentum J&J's Cash Flow Valuation Analysis Image Source: Valuentum We think J&J is worth $185 per share with a fair value range of $148.00 - $222.00. Our discounted cash flow process values each firm on the basis of the present value of all future free cash flows, inclusive of the company's net balance sheet considerations. The near-term operating forecasts used in our enterprise cash flow model covering J&J, including revenue and earnings, do not differ much from consensus estimates or management guidance. Our model reflects a compound annual revenue growth rate of 3.1% during the next five years, a pace that is lower than the firm's 3-year historical compound annual growth rate of 4.8%. Our valuation model reflects a 5-year projected average operating margin of 33.9%, which is above J&J's trailing 3-year average. Beyond Year 5, we assume free cash flow will grow at an annual rate of 2.7% for the next 15 years and 3% in perpetuity. For J&J, we use a 8.6% weighted average cost of capital to discount future free cash flows.
Johnson & Johnson unit’s arthritis injection now indicated for children in U.S.
The Janssen unit of Johnson & Johnson (NYSE:JNJ) announced on Monday that the FDA approved a label expansion for its STELARA subcutaneous injection allowing its use in children aged six years of age and older with active psoriatic arthritis ((PsA)). The rare disease that resembles the adult PsA affects an estimated 5–8% of children and adolescents with chronic inflammatory arthritis. The FDA first approved STELARA, a fully human monoclonal antibody for adults suffering from moderate to severe plaque psoriasis (PsO). STELARA is designed to inhibit cytokines, interleukin (IL)-12 and IL-23, which are believed to lead the body’s counter measures against the overreactive inflammatory reactions seen in certain autoimmune diseases. Also known as ustekinumab, STELARA added $9.1B in sales for J&J (JNJ) in 2021 with ~19% YoY growth.
J&J gets EMA panel nod for conditional approval of Tecvayli for blood cancer subtype
A committee of the European Medicines Agency (EMA) recommended granting conditional marketing authorization to Johnson & Johnson's (NYSE:JNJ) Tecvayli (teclistamab) to treat certain patients with multiple myeloma (MM). The EMA's Committee for Medicinal Products for Human Use (CHMP) said Tecvayli was reviewed under EMA's accelerated assessment program. CHMP added that Tecvayli is indicated as monotherapy to treat adult patients with relapsed and refractory multiple myeloma, who have received at least three prior therapies, including an immunomodulatory agent, a proteasome inhibitor, and an anti-CD38 antibody and have demonstrated disease progression on the last therapy. MM is a cancer which forms in a plasma cell, a type of white blood cell. The European Commission (EC) will make a final decision, which generally follows the recommendation of the EMA, whether to approve the drug.
Shareholder Returns
| JNJ | US Pharmaceuticals | US Market | |
|---|---|---|---|
| 7D | -2.7% | -0.6% | 1.3% |
| 1Y | -4.6% | 0.7% | -11.7% |
Return vs Industry: JNJ underperformed the US Pharmaceuticals industry which returned 3.2% over the past year.
Return vs Market: JNJ exceeded the US Market which returned -11.6% over the past year.
Price Volatility
| JNJ volatility | |
|---|---|
| JNJ Average Weekly Movement | 2.4% |
| Pharmaceuticals Industry Average Movement | 11.7% |
| Market Average Movement | 7.8% |
| 10% most volatile stocks in US Market | 16.9% |
| 10% least volatile stocks in US Market | 3.2% |
Stable Share Price: JNJ is less volatile than 75% of US stocks over the past 3 months, typically moving +/- 2% a week.
Volatility Over Time: JNJ's weekly volatility (2%) has been stable over the past year.
About the Company
| Founded | Employees | CEO | Website |
|---|---|---|---|
| 1886 | 141,700 | Joaquin Duato | https://www.jnj.com |
Johnson & Johnson, together with its subsidiaries, researches and develops, manufactures, and sells various products in the healthcare field worldwide. The company’s Consumer Health segment offers baby care products under the JOHNSON’S and AVEENO Baby brands; oral care products under the LISTERINE brand; skin health/beauty products under the AVEENO, CLEAN & CLEAR, DR. CI:LABO, NEUTROGENA, and OGX brands; TYLENOL acetaminophen products; SUDAFED cold, flu, and allergy products; BENADRYL and ZYRTEC allergy products; MOTRIN IB ibuprofen products; NICORETTE smoking cessation products; and PEPCID acid reflux products.
Johnson & Johnson Fundamentals Summary
| JNJ fundamental statistics | |
|---|---|
| Market Cap | US$439.44b |
| Earnings (TTM) | US$18.37b |
| Revenue (TTM) | US$95.59b |
23.9x
P/E Ratio4.6x
P/S RatioIs JNJ overvalued?
See Fair Value and valuation analysisEarnings & Revenue
| JNJ income statement (TTM) | |
|---|---|
| Revenue | US$95.59b |
| Cost of Revenue | US$30.64b |
| Gross Profit | US$64.95b |
| Other Expenses | US$46.59b |
| Earnings | US$18.37b |
Last Reported Earnings
Jul 03, 2022
Next Earnings Date
Oct 18, 2022
| Earnings per share (EPS) | 6.99 |
| Gross Margin | 67.95% |
| Net Profit Margin | 19.21% |
| Debt/Equity Ratio | 42.7% |
How did JNJ perform over the long term?
See historical performance and comparisonDividends
2.7%
Current Dividend Yield62%
Payout RatioDoes JNJ pay a reliable dividends?
See JNJ dividend history and benchmarks| Johnson & Johnson dividend dates | |
|---|---|
| Ex Dividend Date | Aug 22 2022 |
| Dividend Pay Date | Sep 06 2022 |
| Days until Ex dividend | 10 days |
| Days until Dividend pay date | 25 days |
Does JNJ pay a reliable dividends?
See JNJ dividend history and benchmarks