Johnson & Johnson

JNJ

Pharmaceutical Preparations

Mkt Cap

$373.6B

PE

10.63

Debt

$30.85B

Cash

$21.86B

EV

$382.6B

FCF

$18.25B

Market Cap

$373.6B

P/E Ratio

10.63

Debt

$30.85B

Cash

$21.86B

EV

$382.6B

FCF

$18.25B

Charts data: {"Earnings":[{"time":"2014-12-27","value":16323000000},{"time":"2016-01-02","value":15409000000},{"time":"2016-12-31","value":16540000000},{"time":"2017-12-30","value":1300000000},{"time":"2018-12-29","value":15297000000},{"time":"2019-12-28","value":15119000000},{"time":"2021-01-02","value":14714000000},{"time":"2022-01-01","value":20878000000},{"time":"2022-12-31","value":17941000000},{"time":"2023-12-30","value":35153000000}],"Sales":[{"time":"2014-12-27","value":74331000000},{"time":"2016-01-02","value":70074000000},{"time":"2016-12-31","value":71890000000},{"time":"2017-12-30","value":76450000000},{"time":"2018-12-29","value":81581000000},{"time":"2019-12-28","value":82059000000},{"time":"2021-01-02","value":82584000000},{"time":"2022-01-01","value":93775000000},{"time":"2022-12-31","value":94943000000},{"time":"2023-12-30","value":85159000000}],"Net Margins":[{"time":"2014-12-27","value":0.21959882148767002},{"time":"2016-01-02","value":0.21989610982675456},{"time":"2016-12-31","value":0.23007372374460983},{"time":"2017-12-30","value":0.017004578155657292},{"time":"2018-12-29","value":0.18750689498780354},{"time":"2019-12-28","value":0.1842454819093579},{"time":"2021-01-02","value":0.17817010558946042},{"time":"2022-01-01","value":0.22263929618768327},{"time":"2022-12-31","value":0.18896601118565876},{"time":"2023-12-30","value":0.41279254101151963}],"Assets":[{"time":"2014-12-27","value":131119000000},{"time":"2016-01-02","value":133411000000},{"time":"2016-12-31","value":141208000000},{"time":"2017-12-30","value":157303000000},{"time":"2018-12-29","value":152954000000},{"time":"2019-12-28","value":157728000000},{"time":"2021-01-02","value":174894000000},{"time":"2022-01-01","value":182018000000},{"time":"2022-12-31","value":187378000000},{"time":"2023-12-30","value":167558000000}],"Stockholders Equity":[{"time":"2014-12-27","value":69752000000},{"time":"2016-01-02","value":71150000000},{"time":"2016-12-31","value":70418000000},{"time":"2017-12-30","value":60160000000},{"time":"2018-12-29","value":59752000000},{"time":"2019-12-28","value":59471000000},{"time":"2021-01-02","value":63278000000},{"time":"2022-01-01","value":74023000000},{"time":"2022-12-31","value":76804000000},{"time":"2023-12-30","value":68774000000}],"ROE":[{"time":"2014-12-27","value":0.23401479527468746},{"time":"2016-01-02","value":0.21657062543921293},{"time":"2016-12-31","value":0.2348831264733449},{"time":"2017-12-30","value":0.02160904255319149},{"time":"2018-12-29","value":0.25600816709064134},{"time":"2019-12-28","value":0.2542247481966},{"time":"2021-01-02","value":0.23252947311861943},{"time":"2022-01-01","value":0.28204747173175904},{"time":"2022-12-31","value":0.233594604447685},{"time":"2023-12-30","value":0.511137930031698}],"ROA":[{"time":"2014-12-27","value":0.16465958404197714},{"time":"2016-01-02","value":0.1480237761503924},{"time":"2016-12-31","value":0.14538128151379526},{"time":"2017-12-30","value":0.11828763596371335},{"time":"2018-12-29","value":0.12424650548530931},{"time":"2019-12-28","value":0.11187614120511259},{"time":"2021-01-02","value":0.09547497341246698},{"time":"2022-01-01","value":0.1251304816007208},{"time":"2022-12-31","value":0.11594210633051906},{"time":"2023-12-30","value":0.0898912615333198}]}

Johnson & Johnson, together with its subsidiaries, researches, develops, manufactures, and sells various products in the healthcare field worldwide. The company's Consumer Health segment provides skin health/beauty products under the AVEENO, CLEAN & CLEAR, DR. CI:LABO, NEUTROGENA, and OGX brands; baby care products under the JOHNSON'S and AVEENO Baby brands; oral care products under the LISTERINE brand; TYLENOL acetaminophen products; SUDAFED cold, flu, and allergy products; BENADRYL and ZYRTEC allergy products; MOTRIN IB ibuprofen products; NICORETTE smoking cessation products; and PEPCID acid reflux products. This segment also offers STAYFREE and CAREFREE sanitary pads; o.b. tampons; adhesive bandages under the BAND-AID brand; and first aid products under the NEOSPORIN brand. It serves general public, retail outlets, and distributors. The company's Pharmaceutical segment provides products for rheumatoid arthritis, psoriatic arthritis, inflammatory bowel disease, and psoriasis; HIV/AIDS infectious diseases; mood disorders, neurodegenerative disorders, and schizophrenia; prostate cancer, hematologic malignancies, lung cancer, and bladder cancer; thrombosis, diabetes, and macular degeneration; and pulmonary arterial hypertension. This segment serves retailers, wholesalers, distributors, hospitals, and healthcare professionals directly for prescription use. Its MedTech segment offers electrophysiology products to treat cardiovascular diseases; neurovascular care products to treat hemorrhagic and ischemic stroke; orthopaedics products in support of hips, knees, trauma, spine, sports, and other; advanced and general surgery solutions that focus on breast aesthetics, ear, nose, and throat procedures; and contact lenses and ophthalmic technologies related to cataract and laser refractive surgery under the ACUVUE brand. This segment serves wholesalers, hospitals, and retailers. Johnson & Johnson was founded in 1886 and is based in New Brunswick, New Jersey.

Sector

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10-K
12/31/17

DCF

Discounted Cash Flow Valuation of Johnson & Johnson

Calculate

Growth Years

Growth

Start

End

Discount

Start

End

Multiple

g\r	+10%	+11%	+12%	+13%	+14%
0%	10	9	8	8	7
+1%	11	10	9	8	8
+2%	13	11	10	9	8
+3%	14	13	11	10	9
+4%	17	14	12	11	10

Years	0	1	2	3	4	5	6	7	8	9	10	TV
FCF	$18.25B	$18.69B	$19.14B	$19.6B	$20.08B	$20.56B	$21.06B	$21.57B	$22.09B	$22.62B	$23.17B	$231.7B
DCF		$16.25B	$14.47B	$12.89B	$11.48B	$10.22B	$9.104B	$8.108B	$7.221B	$6.43B	$5.727B	$57.27B
Value	$159.2B

Chart P/E ratio

In the chart Earnings are multiplied by this value.

Earnings Growth 10%

Earnings Stability 8.9%

Competitiveness and MOAT

High margins render the company resilient under dire circumstances, hence able to drive competitors out or acquire them. ROE and ROA measure the average flow generated by each invested dollar. Their marginal value is a forecast of future growth, and it is considered by Buffett and Munger the most important single indicator.

The Net Margin is high enough to offer a good protection on the profits in case of higher costs or higher interests. Furthermore higher margins reduce earnings’ volatility.

Over time the ROA has been decreasing indicating a lower marginal ROA with respect to the calculated one, this could impede growth.

Years	01-2016	12-2016	12-2017	12-2018	12-2019	01-2021	01-2022	12-2022	12-2023	TTM
Net Margin	22%	23%	1.7%	19%	18%	18%	22%	19%	41%	41%
ROA	15%	15%	12%	12%	11%	9.5%	13%	12%	9%	9%
ROE	22%	23%	2.2%	26%	25%	23%	28%	23%	51%	51%

What is the average Net Margin?

The average Net Margin over the past 5 years is +22.91%.

What is the trend of Net Margin?

The trend of Net Margin over the past 5 years is +3.39%.

What is the average Return on Assets (ROA)?

The average ROA over the past 5 years is +11.04%.

What is the trend of Return on Assets (ROA)?

The trend of ROA over the past 5 years is -0.37%.

What is the average Return on Equity (ROE)?

The average ROE over the past 5 years is +29.49%.

What is the trend of Return on Equity (ROE)?

The trend of ROE over the past 5 years is +3.61%.

Safety & Stabiliy

Being debt the number one cause of investment losses and company death, the ratio Debt/FCF is of utmost importance to guarantee safety. On the other hand the Graham’s stability measures the drawdown of earnings, hence indicating the reliability of the flow generated by the company.

Under the assumption that FCF does not diminish and debt does not increase, the current years to repay the debt are acceptable.

The Graham’s stability indicate a relevant drawdown, consider checking when it has occured and why.

Years	01-2016	12-2016	12-2017	12-2018	12-2019	01-2021	01-2022	12-2022	12-2023	TTM
Debt FCF	1.26	1.75	1.95	1.65	1.39	1.84	1.82	2.40	1.69	1.69
Debt Equity	0.28	0.39	0.57	0.51	0.47	0.59	0.49	0.54	0.45	0.45
MIN
Graham Stability	-	-	8.1%	100%	100%	100%	100%	100%	100%	8.1%

What is the Debt/FCF?

The Debt/FCF trailing twelve month is 1.69.

What is the trend of Debt/FCF?

The trend of Debt/FCF over the past 5 years is 0.09.

What is the Graham’s Stability?

Graham’s Stability measure stands at 0.08.

Growth

Growth can be dangerous when forecasting, simply projecting the current growth is in general wrong. A company passes through multiple phases, from being young and unprofitable, to the first periods of profitability and high growth, until it arrives at a period of regime with limited growth. Identifying in which phase the company is in may help forecasting.

Earnings growth has not been increasing in the past years.

Years	12-2016	12-2018	01-2021	12-2022	Trend
Revenue	2.4%	0.86%	1%	-10%	-0.23%
Net Income	11%	18%	34%	96%	-7.8%
Stockholders Equity	-0.34%	2.9%	2.8%	-10%	0.58%
FCF	2.3%	-0.31%	-3.3%	6.2%	-1.2%

What is the 5 year Revenue CAGR?

The Revenue CAGR over the past 5 years is +0.86%.

What is the trend of Revenue growth?

The trend of Revenue growth rate over the past 5 years is -0.23%.

What is the 5 year Earnings CAGR?

The Earnings CAGR over the past 5 years is +18.11%.

What is the trend of Earnings growth?

The trend of Earnings growth rate over the past 5 years is -7.82%.

What is the 5 year Equity CAGR?

The Equity CAGR over the past 5 years is +2.85%.

What is the trend of Equity growth?

The trend of Equity growth rate over the past 5 years is +0.58%.

What is the 5 year FCF CAGR?

The FCF CAGR over the past 5 years is -0.31%.

What is the trend of FCF growth?

The trend of FCF growth rate over the past 5 years is -1.23%.