NYSE:JNJ: good value for what you're paying.

Last update: Jul 15, 2024

Our stock screener has singled out JOHNSON & JOHNSON (NYSE:JNJ) as a stellar value proposition. NYSE:JNJ not only scores well in profitability, solvency, and liquidity but also maintains a very reasonable price point. We'll explore this further.

How We Gauge Valuation for NYSE:JNJ

ChartMill assigns a Valuation Rating to every stock. This score ranges from 0 to 10 and evaluates the different valuation aspects and compares the price to earnings and cash flows, while taking into account profitability and growth. NYSE:JNJ scores a 7 out of 10:

Based on the Price/Earnings ratio, JNJ is valued cheaply inside the industry as 88.02% of the companies are valued more expensively.
JNJ's Price/Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 29.16.
Based on the Price/Forward Earnings ratio, JNJ is valued cheaper than 82.81% of the companies in the same industry.
JNJ's Price/Forward Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 20.66.
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of JNJ indicates a rather cheap valuation: JNJ is cheaper than 84.90% of the companies listed in the same industry.
Based on the Price/Free Cash Flow ratio, JNJ is valued cheaply inside the industry as 84.90% of the companies are valued more expensively.
The excellent profitability rating of JNJ may justify a higher PE ratio.

Profitability Insights: NYSE:JNJ

ChartMill assigns a proprietary Profitability Rating to each stock. The score is computed by evaluating various profitability ratios and margins and ranges from 0 to 10. NYSE:JNJ was assigned a score of 8 for profitability:

JNJ has a Return On Assets of 22.37%. This is amongst the best in the industry. JNJ outperforms 97.92% of its industry peers.
JNJ's Return On Equity of 54.95% is amongst the best of the industry. JNJ outperforms 97.40% of its industry peers.
Looking at the Return On Invested Capital, with a value of 16.20%, JNJ belongs to the top of the industry, outperforming 92.71% of the companies in the same industry.
The last Return On Invested Capital (16.20%) for JNJ is above the 3 year average (14.68%), which is a sign of increasing profitability.
The Profit Margin of JNJ (44.92%) is better than 96.88% of its industry peers.
In the last couple of years the Profit Margin of JNJ has grown nicely.
JNJ's Operating Margin of 28.32% is amongst the best of the industry. JNJ outperforms 93.75% of its industry peers.
In the last couple of years the Operating Margin of JNJ has grown nicely.
JNJ has a Gross Margin of 69.57%. This is in the better half of the industry: JNJ outperforms 72.92% of its industry peers.

Health Assessment of NYSE:JNJ

ChartMill assigns a Health Rating to every stock. This score ranges from 0 to 10 and evaluates the different health aspects like liquidity and solvency, both absolutely, but also relative to the industry peers. NYSE:JNJ scores a 8 out of 10:

JNJ has an Altman-Z score of 4.39. This indicates that JNJ is financially healthy and has little risk of bankruptcy at the moment.
JNJ has a better Altman-Z score (4.39) than 80.21% of its industry peers.
The Debt to FCF ratio of JNJ is 1.80, which is an excellent value as it means it would take JNJ, only 1.80 years of fcf income to pay off all of its debts.
JNJ's Debt to FCF ratio of 1.80 is amongst the best of the industry. JNJ outperforms 94.27% of its industry peers.
A Debt/Equity ratio of 0.45 indicates that JNJ is not too dependend on debt financing.
Even though the debt/equity ratio score it not favorable for JNJ, it has very limited outstanding debt, so we won't put too much weight on the DE evaluation.
JNJ does not score too well on the current and quick ratio evaluation. However, as it has excellent solvency and profitability, these ratios do not necessarly indicate liquidity issues and need to be evaluated against the specifics of the business.

Growth Assessment of NYSE:JNJ

Every stock receives a Growth Rating from ChartMill, ranging from 0 to 10. This rating assesses various growth aspects, including historical and projected EPS and revenue growth. NYSE:JNJ boasts a 4 out of 10:

The Revenue has grown by 10.57% in the past year. This is quite good.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.

Every day, new Decent Value stocks can be found on ChartMill in our Decent Value screener.

Our latest full fundamental report of JNJ contains the most current fundamental analsysis.

Keep in mind

This article should in no way be interpreted as advice. The article is based on the observed metrics at the time of writing, but you should always make your own analysis and trade or invest at your own responsibility.