Johnson and Johnson (JNJ.CA) Stock Fundamental Analysis
Canada - Toronto Stock Exchange - TSX:JNJ -
28.51 CAD
+0.19 (+0.67%)
JNJ gets a fundamental rating of 7 out of 10. The analysis compared the fundamentals against 34 industry peers in the Pharmaceuticals industry. JNJ has an excellent profitability rating, but there are some minor concerns on its financial health. JNJ scores decently on growth, while it is valued quite cheap. This could make an interesting combination. These ratings would make JNJ suitable for value investing!
1. Profitability
1.1 Basic Checks
- JNJ had positive earnings in the past year.
- In the past year JNJ had a positive cash flow from operations.
- Each year in the past 5 years JNJ has been profitable.
- Of the past 5 years JNJ 4 years had a positive operating cash flow.
1.2 Ratios
- JNJ has a Return On Assets of 13.03%. This is amongst the best in the industry. JNJ outperforms 94.12% of its industry peers.
- The Return On Equity of JNJ (31.69%) is better than 100.00% of its industry peers.
- JNJ's Return On Invested Capital of 14.16% is amongst the best of the industry. JNJ outperforms 94.12% of its industry peers.
| 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
- With an excellent Profit Margin value of 27.26%, JNJ belongs to the best of the industry, outperforming 91.18% of the companies in the same industry.
- JNJ's Profit Margin has improved in the last couple of years.
- JNJ has a Operating Margin of 27.00%. This is amongst the best in the industry. JNJ outperforms 91.18% of its industry peers.
- In the last couple of years the Operating Margin of JNJ has grown nicely.
- JNJ has a Gross Margin of 68.14%. This is amongst the best in the industry. JNJ outperforms 88.24% 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
- The Return on Invested Capital (ROIC) is just above the Cost of Capital (WACC), so JNJ is still 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 2.41. This is not the best score and indicates that JNJ is in the grey zone with still only limited risk for bankruptcy at the moment.
- JNJ's Altman-Z score of 2.41 is amongst the best of the industry. JNJ outperforms 85.29% of its industry peers.
- The Debt to FCF ratio of JNJ is 2.34, which is a good value as it means it would take JNJ, 2.34 years of fcf income to pay off all of its debts.
- Looking at the Debt to FCF ratio, with a value of 2.34, JNJ belongs to the top of the industry, outperforming 88.24% of the companies in the same industry.
- A Debt/Equity ratio of 0.55 indicates that JNJ is somewhat dependend on debt financing.
- Looking at the Debt to Equity ratio, with a value of 0.55, JNJ is doing worse than 64.71% of the companies in the same industry.
- Although JNJ does not score too well on debt/equity it has very limited outstanding debt, which is well covered by the FCF. We will not put too much weight on the debt/equity number as it may be because of low equity, which could be a consequence of a share buyback program for instance. This needs to be investigated.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.55 | ||
| Debt/FCF | 2.34 | ||
| Altman-Z | 2.41 |
ROIC/WACC1.28
WACC11.09%
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 has a Current ratio of 1.07. This is in the lower half of the industry: JNJ underperforms 79.41% of its industry peers.
- JNJ has a Quick Ratio of 1.07. This is a bad value and indicates that JNJ is not financially healthy enough and could expect problems in meeting its short term obligations.
- JNJ has a Quick ratio of 0.80. This is in the lower half of the industry: JNJ underperforms 70.59% of its industry peers.
- The current and quick ratio evaluation for JNJ is rather negative, while it does have 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.
- JNJ shows a small growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 6.11% yearly.
- Looking at the last year, JNJ shows a small growth in Revenue. The Revenue has grown by 6.05% in the last year.
- Measured over the past years, JNJ shows a small growth in Revenue. The Revenue has been growing by 2.67% on average per year.
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.
- Based on estimates for the next years, JNJ will show a small growth in Revenue. The Revenue will grow by 5.37% on average per year.
EPS Next Y7.03%
EPS Next 2Y7.63%
EPS Next 3Y7.31%
EPS Next 5Y8.17%
Revenue Next Year6.76%
Revenue Next 2Y6.06%
Revenue Next 3Y6.02%
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
- JNJ is valuated cheaply with a Price/Earnings ratio of 1.92.
- JNJ's Price/Earnings ratio is rather cheap when compared to the industry. JNJ is cheaper than 97.06% of the companies in the same industry.
- Compared to an average S&P500 Price/Earnings ratio of 27.25, JNJ is valued rather cheaply.
- A Price/Forward Earnings ratio of 1.79 indicates a rather cheap valuation of JNJ.
- Based on the Price/Forward Earnings ratio, JNJ is valued cheaper than 97.06% of the companies in the same industry.
- Compared to an average S&P500 Price/Forward Earnings ratio of 25.98, JNJ is valued rather cheaply.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 1.92 | ||
| Fwd PE | 1.79 |
4.2 Price Multiples
- Based on the Enterprise Value to EBITDA ratio, JNJ is valued cheaper than 97.06% of the companies in the same industry.
- JNJ's Price/Free Cash Flow ratio is rather cheap when compared to the industry. JNJ is cheaper than 97.06% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 2.55 | ||
| EV/EBITDA | 1.94 |
4.3 Compensation for Growth
- The low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
- The excellent profitability rating of JNJ may justify a higher PE ratio.
PEG (NY)0.27
PEG (5Y)0.31
EPS Next 2Y7.63%
EPS Next 3Y7.31%
5. Dividend
5.1 Amount
- JNJ has a Yearly Dividend Yield of 2.38%. Purely for dividend investing, there may be better candidates out there.
- Compared to an average industry Dividend Yield of 0.38, JNJ pays a better dividend. On top of this JNJ pays more dividend than 94.12% 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 | 2.38% |
5.2 History
- The dividend of JNJ is nicely growing with an annual growth rate of 9.24%!
- JNJ is new to the dividend game and has less than 3 years of track record.
Dividend Growth(5Y)9.24%
Div Incr YearsN/A
Div Non Decr YearsN/A
5.3 Sustainability
- JNJ pays out 48.70% of its income as dividend. 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 and Johnson / JNJ.CA FAQ
Can you provide the ChartMill fundamental rating for Johnson and Johnson?
ChartMill assigns a fundamental rating of 7 / 10 to JNJ.CA.
What is the valuation status of Johnson and Johnson (JNJ.CA) stock?
ChartMill assigns a valuation rating of 9 / 10 to Johnson and Johnson (JNJ.CA). This can be considered as Undervalued.
What is the profitability of JNJ stock?
Johnson and Johnson (JNJ.CA) has a profitability rating of 8 / 10.
Can you provide the financial health for JNJ stock?
The financial health rating of Johnson and Johnson (JNJ.CA) is 6 / 10.
Is the dividend of Johnson and Johnson sustainable?
The dividend rating of Johnson and Johnson (JNJ.CA) is 4 / 10 and the dividend payout ratio is 48.7%.