Stock (Symbol) |
Johnson & Johnson (JNJ) |
Stock Price |
$112 |
Sector |
| Healthcare |
Data is as of |
| May 2, 2016 |
Expected to Report |
| Jul 12 – Jul 18 |
Company Description |
 Johnson & Johnson is a holding company. The Company is engaged in the research and development, manufacture and sale of a range of products in the health care field. The Company has more than 265 operating companies conducting business around the world. The Company’s primary focus is products related to human health and well-being. The Company is organized into three business segments: Consumer, Pharmaceutical and Medical Devices. The Company’s subsidiaries operate 134 manufacturing facilities occupying approximately 21.5 million square feet of floor space. The Company’s research facilities are located in the United States, Belgium, Brazil, Canada, China, France, Germany, India, Israel, Japan, the Netherlands, Singapore, Switzerland and the United Kingdom. Source: Thomson Financial |
Sharek’s Take |
 Johnson & Johnson (JNJ) just produced a pretty decent qtr even as a strong dollar hurt results. The company had 8% profit growth last qtr on 1% sales growth, which was reduced 3% from foreign exchange. JNJ beat the street by 2 cents and upped 2016 profit estimates a bit. Now the company is expected to post double-digit profit growth during the 3rd and 4th qtr this year. J&J has 3 divisions. Pharmaceutical serves the immunology, infectious disease, neuroscience and oncology fields. Medical devices includes the cardiovascular, diabetes, diagnostics, orthopaedic, surgery and vision care fields. The Consumer division includes Tylenol, Motrin, Benadryl, Band-Aid, Listerine, Carefree and Neutrogena. J&J’s credo is “Business must make a sound profit” and JNJ had done so as its grown profits every year since 1984. JNJ is in my opinion the safest stock, with a AAA rating from S&P and a dividend that’s has increased every year since 1963. Around half J&J’s sales are International, and that has held back profits, but that issue could go away this qtr. JNJ is a great conservative investment that’s also timely right now as the outlook is good and getting better. The estimated long-term growth rate is just 6% per year but investors also get a 3% yield. |
One Year Chart |
 JNJ was having a tough time last year as profits were hurt from the strong dollar. But now we will get earlier comparisons as profit growth estimates for the next 4 qtrs are -2%, 11%, 10% and 2%. J&J has beaten the street the past 4 qtrs as well. 2016’s profit estimate got bumped up from $6.52 to $6.60, 2017’s increased by more than a dime to $7.01. The Estimated Long-Term Growth Rate is just 6%, I prefer 10%. |
Fair Value |
 JNJ currently sells for 17x earnings, which is my Fair Value. Upside doesn’t seem great but the dollar has weakened lately and that could boost profit estimates in the coming qtrs. |
Bottom Line |
 Johnson & Johnson is in my opinion the most conservative stock for investors who want growth. With an estimated long-term growth rate of 6% a year in addition to a 3% yield, the estimated total return is 9% a year. Not bad considering CDs aren’t paying squat. JNJ ranks 15th of 35 stocks in the Conservative Portfolio Power Rankings. |
Power Rankings |
Growth Stock Portfolio
N/AAggressive Growth Portfolio N/AConservative Stock Portfolio 15 of 35 |
