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Category: Stock Market and Johnson & Johnson
Date: 10 October 2019 Stock Price: $129.22 We take a look at the 2nd quarter earnings report of their 20219 fiscal year of Johnson & Johnson the world's largest and most broad based healthcare company and owner of brands such as Listerine and Band-Aid
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About Johnson & Johnson
At Johnson & Johnson, we believe good health is the foundation of vibrant lives, thriving communities and forward progress. That’s why for more than 130 years, we have aimed to keep people well at every age and every stage of life. Today, as the world’s largest and most broadly based healthcare company, we are committed to using our reach and size for good. We strive to improve access and affordability, create healthier communities, and put a healthy mind, body and environment within reach of everyone, everywhere. Every day, our more than 130,000 employees across the world are blending heart, science and ingenuity to profoundly change the trajectory of health for humanity.
The image below shows a snapshot of Johnson & Johnson
The image below shows a snapshot of Johnson & Johnson
Overview of Johnson & Johnson's latest earnings report
Data below is reported for the latest quarter unless stated otherwise
- Sales: $20.562 billion (down from $20.830 billion for the same quarter of the previous year)
- Sales decreased by -1.3% over the last 12 months
- Cost of products sold: $6.940 billion (up from $6.927 million for the same quarter of the previous year)
- Cost of products sold increased by 0.2% over the last 12 months
- Net earnings: $5.607 billion (down from $3.954 billion for the same quarter of the previous year)
- Diluted earnings per share: $2.08 (up from $1.45 for the same quarter of the previous year)
- Dividend (for 3rd quarter has been announced); $0.95
- Dividend yield: 2.9%
- Dividend yield: 2.9%
- Diluted weighted-average shares outstanding: 2.691 billion (down from 2.721 billion for the same quarter of the previous year)
- Cash and cash equivalents: $14.376 billion
- Cash and cash equivalents per share: $5.34
- Cash and cash equivalents makes up 4.13% of Johnson & Johnson's market capital
- Cash and cash equivalents makes up 9.26% of Johnson & Johnson's total assets
- Accounts receivable: $14.653 billion
- Accounts receivable makes up 9.44% of Johnson & Johnson's total assets
- Inventories: $9.263 billion
- Inventories makes up 5.97% of Johnson & Johnson's total assets
- Stockholders equity of Johnson & Johnson: $60.785 billion
- Stockholders equity per share: $22.58
- So Johnson & Johnson is trading at 5.72 times its stockholders equity per share. This is outside the expected range of between 2 and 4 most firms tend to trade at
- Long term debt of Johnson & Johnson: $27.699 billion
- Long term debt makes up 29.36% of Johnson & Johnson's total liabilities
- Cash generated from operations by Johnson & Johnson (for the 6 months): $9.491 billion
- Cash generated from operations per share: $ 3.52
Johnson & Johnson's management commentary on the results and fiscal guidance
New Brunswick, N.J. (July 16, 2019) – Johnson & Johnson (NYSE: JNJ) today announced results for second-quarter 2019. “We delivered solid second-quarter underlying sales growth and strong earnings growth that enables us to make investments in innovation to accelerate performance in each of our businesses,” said Alex Gorsky, Chairman and Chief Executive Officer. “Our pipelines continue to progress with the launch of new products and several regulatory submissions and approvals, which positions us well to deliver the next wave of transformational products and solutions. I am proud of our talented colleagues across Johnson & Johnson who continue to deliver significant healthcare advances to improve the lives of patients and consumers around the world.”
FULL YEAR 2019 GUIDANCE:
Johnson & Johnson does not provide GAAP financial measures on a forward-looking basis because the company is unable to predict with reasonable certainty the ultimate outcome of legal proceedings, unusual gains and losses, acquisition-related expenses and purchase accounting fair value adjustments without unreasonable effort. These items are uncertain, depend on various factors, and could be material to Johnson & Johnson's results computed in accordance with GAAP.
FULL YEAR 2019 GUIDANCE:
Johnson & Johnson does not provide GAAP financial measures on a forward-looking basis because the company is unable to predict with reasonable certainty the ultimate outcome of legal proceedings, unusual gains and losses, acquisition-related expenses and purchase accounting fair value adjustments without unreasonable effort. These items are uncertain, depend on various factors, and could be material to Johnson & Johnson's results computed in accordance with GAAP.
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Johnson & Johnson (NYSE: JNJ) stock price history
The image below, obtained from Google, shows the stock price history of Johnson & Johnson (NYSE: JNJ) over the last 5 years. And it's been an ok time for Johnson & Johnson stockholders. 5 years ago it was trading at around $101 and its currently trading at around $129.22 a stock. That's a return of 27.9% provided to Johnson & Johnson stockholders over the last 5 years. While the return provided is pretty decent the opportunity cost of holding Johnson & Johnson stock that made 27.9% over the last 5 years compared to holding Netflix for example that made over 300% becomes very significant. The stock of Johnson & Johnson is trading at a lot closer to its 52 week low of $121 than it is to its 52 week high of $148.99 which to us is a clear indication that the short term sentiment and momentum of Johnson & Johnson's stock is pretty negative right now, and a lot of this has to to do with the court ruling JNJ needs to pay $8 billion in Risperdal case. See more about this below under Recent coverage of Johnson & Johnson.
Recent coverage of Johnson & Johnson
The extract below discusses the court ruling against Johnson & Johnson in the Risperdal antipsychotic drug case as obtained from Thestreet,com
Johnson & Johnson (JNJ - Get Report) shares traded lower Wednesday after a jury in Pennsylvania ordered the consumer healthcare giant to pay $8 billion in damages linked to side effects from its antipsychotic drug Risperdal, opening the potential for similar suits around the state. Jurors in the Philadelphia Court of Common Pleas said Tuesday that Johnson & Johnson needed to pay the $8 billion in punitive damages on top of a $680,000 compensatory judgement from 2018 for failing to warn Risperdal user Nicholas Murray of the risks of gynecomastia, a condition in which men can develop enlarged breasts.
"This award is grossly disproportionate with the initial compensatory award in this case, and the Company is confident it will be overturned," the company said in a statement following the verdict, which is vowed to appeal. "This decision is inconsistent with multiple determinations outside of Philadelphia regarding the adequacy of the Risperdal labeling, the medicine's efficacy, and findings in support of the company."
Read the full article here
Johnson & Johnson (JNJ - Get Report) shares traded lower Wednesday after a jury in Pennsylvania ordered the consumer healthcare giant to pay $8 billion in damages linked to side effects from its antipsychotic drug Risperdal, opening the potential for similar suits around the state. Jurors in the Philadelphia Court of Common Pleas said Tuesday that Johnson & Johnson needed to pay the $8 billion in punitive damages on top of a $680,000 compensatory judgement from 2018 for failing to warn Risperdal user Nicholas Murray of the risks of gynecomastia, a condition in which men can develop enlarged breasts.
"This award is grossly disproportionate with the initial compensatory award in this case, and the Company is confident it will be overturned," the company said in a statement following the verdict, which is vowed to appeal. "This decision is inconsistent with multiple determinations outside of Philadelphia regarding the adequacy of the Risperdal labeling, the medicine's efficacy, and findings in support of the company."
Read the full article here
Johnson & Johnson (NYSE: JNJ) latest stock valuation
So what is Johnson & Johnson's stock worth based on the release of their latest earnings report and the fiscal guidance provided by Johnson & Johnson? Based on the latest earnings results, and their fiscal guidance our valuation models provide a target (full value) price for Johnson & Johnson at $136.40 a Johnson & Johnson stock. We therefore believe that the stock is slightly undervalued at its current price of $129.22.
We usually suggest long term fundamental or value investors look to enter into a stock at least 10% below our target (full value) price which in this case is $136.40 Therefore we see a good entry point into Johnson & Johnson stock at $122.70 or below. We expect the stock of Johnson & Johnson to drift along its current price until their next earnings release which is scheduled for 15 October 2019. We therefore rate Johnson & Johnson as a hold
Future and current investors in Johnson & Johnson should note the court ruling against the group could set the president for various other similar cases against the group, which will mean current and future profits and/or cash reserves are used to settle payments instead of being paid out or returned to shareholders via dividends or share repurchase programs,
We usually suggest long term fundamental or value investors look to enter into a stock at least 10% below our target (full value) price which in this case is $136.40 Therefore we see a good entry point into Johnson & Johnson stock at $122.70 or below. We expect the stock of Johnson & Johnson to drift along its current price until their next earnings release which is scheduled for 15 October 2019. We therefore rate Johnson & Johnson as a hold
Future and current investors in Johnson & Johnson should note the court ruling against the group could set the president for various other similar cases against the group, which will mean current and future profits and/or cash reserves are used to settle payments instead of being paid out or returned to shareholders via dividends or share repurchase programs,