JOHNSON & JOHNSON (JNJ) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:JNJ - US4781601046 - Common Stock
218.98 USD
+0.49 (+0.22%)
JNJ gets a fundamental rating of 6 out of 10. The analysis compared the fundamentals against 191 industry peers in the Pharmaceuticals industry. JNJ scores excellent on profitability, but there are some minor concerns on its financial health. JNJ has a correct valuation and a medium growth rate. Finally JNJ also has an excellent dividend rating. These ratings could make JNJ a good candidate for dividend investing.
1. Profitability
1.1 Basic Checks
- JNJ had positive earnings in the past year.
- JNJ had a positive operating cash flow in the past year.
- JNJ had positive earnings in each of the past 5 years.
- Of the past 5 years JNJ 4 years had a positive operating cash flow.
1.2 Ratios
- The Return On Assets of JNJ (13.03%) is better than 93.19% of its industry peers.
- With an excellent Return On Equity value of 31.69%, JNJ belongs to the best of the industry, outperforming 93.72% of the companies in the same industry.
- Looking at the Return On Invested Capital, with a value of 14.16%, JNJ belongs to the top of the industry, outperforming 93.72% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 13.03% | ||
| ROE | 31.69% | ||
| ROIC | 14.16% |
ROA(3y)N/A
ROA(5y)N/A
ROE(3y)N/A
ROE(5y)N/A
ROIC(3y)N/A
ROIC(5y)N/A
1.3 Margins
- JNJ's Profit Margin of 27.26% is amongst the best of the industry. JNJ outperforms 92.67% of its industry peers.
- In the last couple of years the Profit Margin of JNJ has grown nicely.
- JNJ's Operating Margin of 27.00% is amongst the best of the industry. JNJ outperforms 92.67% of its industry peers.
- JNJ's Operating Margin has improved in the last couple of years.
- JNJ has a better Gross Margin (68.14%) than 76.96% of its industry peers.
- JNJ's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 27% | ||
| PM (TTM) | 27.26% | ||
| GM | 68.14% |
OM growth 3Y6.15%
OM growth 5Y6.99%
PM growth 3Y8.26%
PM growth 5Y9.82%
GM growth 3Y-0.67%
GM growth 5Y0.65%
2. Health
2.1 Basic Checks
- With a Return on Invested Capital (ROIC) just above the Cost of Capital (WACC), JNJ is creating some value.
- There is no outstanding debt for JNJ. This means it has a Debt/Equity and Debt/FCF ratio of 0 and it is amongst the best of the sector and industry.
2.2 Solvency
- JNJ has an Altman-Z score of 4.92. This indicates that JNJ is financially healthy and has little risk of bankruptcy at the moment.
- The Altman-Z score of JNJ (4.92) is better than 73.30% of its industry peers.
- JNJ has a debt to FCF ratio of 2.34. This is a good value and a sign of high solvency as JNJ would need 2.34 years to pay back of all of its debts.
- JNJ's Debt to FCF ratio of 2.34 is amongst the best of the industry. JNJ outperforms 93.19% of its industry peers.
- A Debt/Equity ratio of 0.55 indicates that JNJ is somewhat dependend on debt financing.
- JNJ's Debt to Equity ratio of 0.55 is on the low side compared to the rest of the industry. JNJ is outperformed by 65.97% of its industry peers.
- 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.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.55 | ||
| Debt/FCF | 2.34 | ||
| Altman-Z | 4.92 |
ROIC/WACC1.45
WACC9.75%
2.3 Liquidity
- JNJ has a Current Ratio of 1.07. This is a normal value and indicates that JNJ is financially healthy and should not expect problems in meeting its short term obligations.
- JNJ's Current ratio of 1.07 is on the low side compared to the rest of the industry. JNJ is outperformed by 82.72% of its industry peers.
- A Quick Ratio of 0.80 indicates that JNJ may have some problems paying its short term obligations.
- JNJ's Quick ratio of 0.80 is on the low side compared to the rest of the industry. JNJ is outperformed by 82.20% of its industry peers.
- 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.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.07 | ||
| Quick Ratio | 0.8 |
3. Growth
3.1 Past
- JNJ shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 8.11%, which is quite good.
- The Earnings Per Share has been growing slightly by 6.11% on average over the past years.
- JNJ shows a small growth in Revenue. In the last year, the Revenue has grown by 6.05%.
- JNJ shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 2.67% yearly.
EPS 1Y (TTM)8.11%
EPS 3Y2.06%
EPS 5Y6.11%
EPS Q2Q%20.59%
Revenue 1Y (TTM)6.05%
Revenue growth 3Y5.6%
Revenue growth 5Y2.67%
Sales Q2Q%9.08%
3.2 Future
- Based on estimates for the next years, JNJ will show a quite strong growth in Earnings Per Share. The EPS will grow by 8.17% on average per year.
- JNJ is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 5.37% yearly.
EPS Next Y7.03%
EPS Next 2Y7.63%
EPS Next 3Y7.31%
EPS Next 5Y8.17%
Revenue Next Year5.49%
Revenue Next 2Y5.21%
Revenue Next 3Y5.08%
Revenue Next 5Y5.37%
3.3 Evolution
- When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
- The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
- Based on the Price/Earnings ratio of 20.28, the valuation of JNJ can be described as rather expensive.
- Based on the Price/Earnings ratio, JNJ is valued cheaper than 81.15% of the companies in the same industry.
- JNJ is valuated rather cheaply when we compare the Price/Earnings ratio to 27.30, which is the current average of the S&P500 Index.
- The Price/Forward Earnings ratio is 18.94, which indicates a rather expensive current valuation of JNJ.
- Based on the Price/Forward Earnings ratio, JNJ is valued a bit cheaper than 78.01% of the companies in the same industry.
- The average S&P500 Price/Forward Earnings ratio is at 24.32. JNJ is valued slightly cheaper when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 20.28 | ||
| Fwd PE | 18.94 |
4.2 Price Multiples
- 81.15% of the companies in the same industry are more expensive than JNJ, based on the Enterprise Value to EBITDA ratio.
- Based on the Price/Free Cash Flow ratio, JNJ is valued cheaper than 82.72% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 26.92 | ||
| EV/EBITDA | 16.71 |
4.3 Compensation for Growth
- The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates JNJ does not grow enough to justify the current Price/Earnings ratio.
- The excellent profitability rating of JNJ may justify a higher PE ratio.
PEG (NY)2.88
PEG (5Y)3.32
EPS Next 2Y7.63%
EPS Next 3Y7.31%
5. Dividend
5.1 Amount
- With a Yearly Dividend Yield of 2.39%, JNJ has a reasonable but not impressive dividend return.
- Compared to an average industry Dividend Yield of 0.40, JNJ pays a better dividend. On top of this JNJ pays more dividend than 93.19% of the companies listed in the same industry.
- JNJ's Dividend Yield is a higher than the S&P500 average which is at 1.82.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.39% |
5.2 History
- The dividend of JNJ is nicely growing with an annual growth rate of 9.24%!
- JNJ has paid a dividend for at least 10 years, which is a reliable track record.
- JNJ has not decreased their dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)9.24%
Div Incr Years34
Div Non Decr Years34
5.3 Sustainability
- 48.70% of the earnings are spent on dividend by JNJ. This is a bit on the high side, but may be sustainable.
- The dividend of JNJ is growing, but the earnings are growing slower. This means the dividend growth is not sustainable.
DP48.7%
EPS Next 2Y7.63%
EPS Next 3Y7.31%
JOHNSON & JOHNSON / JNJ FAQ
Can you provide the ChartMill fundamental rating for JOHNSON & JOHNSON?
ChartMill assigns a fundamental rating of 6 / 10 to JNJ.
What is the valuation status of JOHNSON & JOHNSON (JNJ) stock?
ChartMill assigns a valuation rating of 6 / 10 to JOHNSON & JOHNSON (JNJ). This can be considered as Fairly Valued.
What is the profitability of JNJ stock?
JOHNSON & JOHNSON (JNJ) has a profitability rating of 8 / 10.
Can you provide the financial health for JNJ stock?
The financial health rating of JOHNSON & JOHNSON (JNJ) is 6 / 10.
Is the dividend of JOHNSON & JOHNSON sustainable?
The dividend rating of JOHNSON & JOHNSON (JNJ) is 7 / 10 and the dividend payout ratio is 48.7%.