Stock (Symbol) |
Johnson & Johnson (JNJ) |
Stock Price |
$115 |
Sector |
| Healthcare |
Data is as of |
| February 12, 2017 |
Expected to Report |
| Apr 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) is down off its highs from last year, and is a good safe stock to buy at these levels. JNJ got a little ahead of itself last year, as dividend paying value stocks were en Vogue. But last July investors shifted their focus from value stocks to growth stocks, and that’s also when JNJ peaked at a high of $126. Now at $115 JNJ is a better value, but profit growth is expected to slow from 9% the prior two years to 6% this year. Still, the company has ten drugs in development that could be approved between 2015-2019 with each having the potential of $1 billion in annual sales or more. Here’s JNJ’s segment breakdown:
J&J’s credo is “Business must make a sound profit” and JNJ has delivered profit growth every year since 1984. The company has a AAA rating from S&P and a dividend that’s has increased every year since 1963. JNJ is one of the two safest stocks in the world — along with Microsoft. But what you gain in security you lose in annual growth as JNJ carries an Estimated Long-Term Growth Rate of just 6% per year. But, investors also get a solid 3% yield with a dividend that’s increased every year since 1963. Now that J&J is well off its highs, it’s a good buy for conservative investors at 16x earnings. |
One Year Chart |
 Here you can clearly see the stock’s peak last Summer. Last qtr the company grew sales 2% and profits increased 10% and beat the 9% estimate by a penny. What’s bad is 2017 profit estimates fell from $7.14 last qtr to $7.04 now. Qtrly Estimates came down a bit too, and now are 5%, 4%, 6% and 6% for the next 4 qtrs. |
Fair Value |
 JNJ’s P/E has fallen from 17 to 16 since last qtr, which is good because now the stock has a little upside to its Fair Value. But still, the upside isn’t great — until you include the dividend yield. |
Bottom Line |
 Johnson & Johnson is a fabulous stock for conservative investors. I feel this stock is an excellent selection for people who want their money kept safe or for trust funds. But while JNJ delivers stability it lags in its profit growth rate. Still, the company does pay a 3% yield and with that in mind investors could envision total returns just under 10% a year long-term. JNJ stock ranks 26th of 29 stocks in the Conservative Portfolio Power Rankings. |
Power Rankings |
Growth Stock Portfolio
N/AAggressive Growth Portfolio N/AConservative Stock Portfolio 26 of 29 |
