Johnson and Johnson (JNJ): A Clear Insight into Stock Performance, Innovations, and Position in the Market 2024
Johnson and Johnson (JNJ): A Clear Insight into Stock Performance, Innovations, and Position in the Market 2024
Blog Article
Johnson & Johnson is currently trading near its 52-week low, down 4% over the last year. The question one may ask at this point is if the stock is undervalued. In this analysis, we'll run through a myriad of financial metrics, revenue growth, dividend safety, and institutional ownership to establish whether JNJ is a worthy addition to your investment portfolio.
Overview of Historical Performance
Setting the background before our analysis is in order, looking back at Johnson & Johnson. It has returned an average of only 507.7 percent over the past decade, which while positive, wasn't particularly exciting if not for the reinvestment of dividends. Currently, it sports a forward yield of 3.12 percent and a forward P/E just barely above 14.
The analysts at Seeking Alpha and, for the most part, Wall Street view JNJ as a buy at this time, which would indicate some underlying strength in the numbers. A closer look is required to determine the trends for both revenues and net income.
Revenue and Income Growth
Assuming the growth in revenues over the last decade, we would want to see an annual growth consistent between 3% and 7%. In December 2014, JNJ reports a topline revenue of $74 bln. This grew in the most recent annual report to $85 bln. This growth does, however, not come in consistently year on year—an indication of volatility in performance.
In contrast, net income on the bottom line has shown a healthier rise—more than directly doubling from $16 billion to $35 billion over the same period. This metric is again muddled by inconsistencies in the rise year after year, which should present warning signs.
Cash vs. Total Debt
The other critical characteristic of the company's financial health is the relationship between cash availability and total debt. JNJ had $33 billion in cash as of 2014; this number has shrunk to close to $23 billion according to the latest quarterly report. On the other hand, the total debt has increased from $19 billion to close to $30 billion, representing an alarming trend of increasing debt and decreasing cash at hand. Read Full Article...