NYSE:JNJ
$62.96
(2/9 2:35PM)
+0.9%
| Open | $62.55 |
Mkt Cap | $172.1 Billion |
| High | $63.47 |
52Wk High | $65.95 |
| Low | $62.47 |
52Wk Low | $46.25 |
| Volume | 7.9 Million |
Avg Vol 10D | 14.3 Million |
JNJ Stock Evaluation
As of the time of this report, there has been relatively little movement in price for JNJ over the last week. Furthermore, there has been no revision to earnings expectations or guidance. Given these factors as well as those contained in our complete analysis, we do not have enough of a catalyst to necessitate a rating change. For more detail please read the rest of our analysis of JNJ's valuation.
Recommendation Summary
As frequent users of Ockham Research are aware, we strive to adhere to the principal of Ockham's Razor. This company ideal drives us to keep our stock analysis as simple as possible, but of course, no simpler than is necessary. It is in that vein that we focus much of our analysis on fundamental factors, peer analysis, and valuations versus historically normal ranges. However, we also apply standard deviation and volatility studies for each index and sector in order to understand more completely the risks associated with each market environment.
The market has gone up fairly substantially over the last twelve months and many of our valuations have become more negative as prices have increased. In the case of JNJ, the Healthcare sector has actually underperformed the market over that twelve month time frame. So, please take a moment to firmiliarize yourself with our analysis of JNJ as we are reaffirming our Undervalued rating this week.
First, JNJ decreased in price by 0.35% since 01/30/2010 and this does not greatly impact our outlook.
Second, since our last report, there have been no significant adjustments in earnings expectations or guidance.
JNJ Revenue
As a value investing shop, we are interested in seeing how JNJ's revenues measure up against past performances. One easily understandable way of doing that is to compare Price to Sales per share levels over a given time frame. Assuming it is available, Ockham prefers to look at ten years of history (for this stock there are 10 years of history available) and we weigh recent years more heavily. This allows us to find weighted average historical high and low Price to Sales ratios, which give us a better idea of the stock's current underlying value. Using this method, we have established a high range for Price to Sales of 3.99x and the low end of the range at 3.09x.
With respect to these historically rational metrics, notice that the current Price to Sales per share ratio for JNJ of 2.79x is well below its normal historic Price to Sales levels. At a price of $62.64, JNJ is 22% below where we would expect to see it. Clearly, this stock looks undervalued compared to historical levels, at least on a Price to Sales basis. This will positively affect our analysis because it is rare to find a stock this far below historical norms, and we would expect some price appreciation to bring this metric back towards a more normal range.
JNJ Cash Earnings
Cash Earnings is always one of the most important factors to review for a company and, more importantly, an investment in a stock. JNJ is significantly below its historical average multiple of cash earnings as calculated by Ockham. Similar to our analysis of sales per share, Ockham looks at the last 10 years of cash earnings levels for JNJ to identify where the current high and low price levels have been historically in relation to profit per share. Again, we utilize a weighted average methodology which relies more heavily on recent years of data. This weighted average framework provides us with an average high Price to Cash Earnings ratio per share of 16.99 and a 13.15 low over the same period.
Now that JNJ’s current price is $62.64 and its Price to Cash Earnings ratio is 11.15, we are very positive on its outlook from the cash earnings perspective. In fact, JNJ is now trading a full 27% below its average historical Price to Cash Earnings ratio at these profit per share levels. When our clients ask us why JNJ has great long term potential, the Cash Earnings levels to current stock is one of our primary reasons. But naturally, now we need for the overall market to recognize this disparity.
JNJ Dividends
While it is not necessary to pay an attractive dividend or a dividend at all, to receive a positive rating from Ockham, we view dividends as an additionally helpful measure in determining the future potential of any company.
In JNJ’s case, the estimated annual dividend is $1.96 resulting in a current dividend yield of 3.13%. Similar to our review of Sales and Cash Earnings per share, we evaluate dividend yields from JNJ against the historic high and low levels over the past 10 years. The highest dividend yield from JNJ over this period was 4.24% while the lowest dividend yield was 1.15% If you are looking for some “bang for your buck” then a dividend yield of 16.14% above the historical median should be enticing. JNJ receives a positive boost in our view because as you know, equity at its core is simply a claim on future dividends.
Notice a Discussion Covering JNJ Appeared Recently in the Financial News
The latest news from Fast Money on JNJ is available through Ockham's news analytics platform RazorWire.
The Motley Fool CAPS data suggests that investors believe Johnson & Johnson will beat the market in the foreseeable future. When looking at our entire coverage universe and ranking stocks by the attention they receive on RazorWire, it is clear that Johnson & Johnson has been talked about more than normal recently. We consider JNJ as Undervalued at the current price of $62.64. According to our methodology, this stock has appreciation potential based on current fundamentals which only improves if earnings or revenue surprise.
“… well, you know what, if you want to play defense, if you want to go that route, go to the name is mentioned, the JOHNSON & JOHNSON. I think cisco traded okay today. …”
Dividends and Johnson & Johnson Among the Topics Covered on Mad Money
If JNJ's dividends are important to you, take a look at the news as they were the topic of conversation on Mad Money.
In comparing news flow statistics for the various companies we follow through RazorWire, we can tell you that JNJ ranks just about where it normally does. The Motley Fool CAPS data suggests that investors believe Johnson & Johnson will beat the market in the foreseeable future. We consider JNJ as Undervalued at the current price of $63.48. According to our methodology, this stock has appreciation potential based on current fundamentals which only improves if earnings or revenue surprise.
“… Bank of america, bristol meyers, JOHNSON & JOHNSON, centure and verizon. > > she's going to continue with j and j and pick up an industrial. …”
Johnson & Johnson News is Being Covered Right Now on WSJ Marketbeat
The latest news from business television and influential blogs is always available through Ockham's RazorWire, and this news is in relation to Johnson & Johnson.
When taking into account the amount of news coverage each stock normally sees as a percentage of the total, Johnson & Johnson has actually sunk a bit in comparison to the others. Crowd sentiment is favorable on this stock, as measured by the Motley Fool CAPS survey. At present, Ockham has a valuation stance of Undervalued on JNJ, as we could see significant price appreciation based on current fundamentals like cash earnings and revenue.
“… 88), JNJ (6. 80), CVX (6. 58). Today’s laggers and their point contribution: DD (-0. 23), MMM (-0. 08), WMT (0. 08), MSFT (0. 53), VZ (0. 91). Nasdaq Composite, up 18. …”
The Razor's Edge: What is Happening with Johnson & Johnson Now?
Staying informed on the news is invaluable for investors, and RazorWire has captured a recently discussion on JNJ from The Razor's Edge.
Based on our methodology, Johnson & Johnson should hold some appeal to value investors as we view it as Undervalued. Crowd sentiment is leaning to the bearish side, according to the robust data set collected by the Motley Fool CAPS survey. We noticed recently that in comparison to all other stocks we analyze in the news; JNJ has received less coverage from the financial media in business television and blogs.
“… patent settlement last September in which BSX must pay $716 million to JNJ. The infringement cases are not all one-way, as back in July 2005 JOHNSON & JOHNSON infringed on some ... …”
News Breaking on Johnson & Johnson on Fast Money
The latest news from Fast Money on JNJ is available through Ockham's news analytics platform RazorWire.
As we analyze the results from RazorWire, one thing we do is rank each stock in terms of amount of news coverage. Recently, JNJ has been less covered in the news compared to the rest of our universe of stocks. The Motley Fool CAPS data suggests that investors believe Johnson & Johnson will beat the market in the foreseeable future. We consider JNJ as Undervalued at the current price of $62.86. According to our methodology, this stock has appreciation potential based on current fundamentals which only improves if earnings or revenue surprise.
“… JOHNSON AND JOHNSON is one. It's great. Ibm. We bought ibm today for the first time in I don't know how long. You know, feel like at 11 times earnings, this is place you ... …”
Johnson & Johnson Was Talked About by Fox Business
The latest news on Fox Business in regards to JNJ came through on RazorWire recently.
As we analyze the results from RazorWire, one thing we do is rank each stock in terms of amount of news coverage. Recently, JNJ has been less covered in the news compared to the rest of our universe of stocks. The Motley Fool CAPS data suggests that investors believe Johnson & Johnson will beat the market in the foreseeable future. We consider JNJ as Undervalued at the current price of $63.19. According to our methodology, this stock has appreciation potential based on current fundamentals which only improves if earnings or revenue surprise.
“… You have more familiar names like JOHNSON & JOHNSON and you think perhaps the health care debate is behind us? We can get serious about buying helped stocks? > > …”
Mad Money: Discussion of JNJ's Earnings
Any suprise in earnings can cause a major swing in stock prices, so we are always on the lookout for the freshest news available for earnings reports or expectations.
Crowd sentiment is favorable on this stock, as measured by the Motley Fool CAPS survey. When taking into account the amount of news coverage each stock normally sees as a percentage of the total, Johnson & Johnson has actually sunk a bit in comparison to the others. At present, Ockham has a valuation stance of Undervalued on JNJ, as we could see significant price appreciation based on current fundamentals like cash earnings and revenue.
“… caller: on tuesday morning I listened to the earnings call for j&j, JOHNSON & JOHNSON. > > don't buy! > > there's nothing there, my friend! …”
More News Than Normal on JNJ from The Call
We are observing a lot of attention being paid to JNJ in the news, so if you hold the stock you may want to take a look at what is going on.
Based on our methodology, Johnson & Johnson should hold some appeal to value investors as we view it as Undervalued. Crowd sentiment is leaning to the bearish side, according to the robust data set collected by the Motley Fool CAPS survey. We noticed recently that in comparison to all other stocks we analyze in the news; JNJ has received less coverage from the financial media in business television and blogs.
“… JOHNSON & JOHNSON, call it -- I called it earlier a soft single in baseball parlance. That stock down a little bit today. Basically the profit beat $1. …”
Delevoping Economies and Where JNJ Fits In on The Call
Johnson & Johnson and an emerging market growth strategy were discussed recently on JNJ.
As we analyze the results from RazorWire, one thing we do is rank each stock in terms of amount of news coverage. Recently, JNJ has been less covered in the news compared to the rest of our universe of stocks. The Motley Fool CAPS data suggests that investors believe Johnson & Johnson will beat the market in the foreseeable future. We consider JNJ as Undervalued at the current price of $62.60. According to our methodology, this stock has appreciation potential based on current fundamentals which only improves if earnings or revenue surprise.
“… Dupont, take a look at dupont and take a look at JOHNSON & JOHNSON. Dupont, 70% overseas and JOHNSON & JOHNSON, 50% overseas and larry, those kinds of numbers become very ... …”
The Outlook for Emerging Markets and Johnson & Johnson Discussed on Squawk On The Street
For growth, there is nowhere growing more rapidly than emerging markets. Recently, Squawk On The Street talked about emerging markets and their impact on Johnson & Johnson.
As we analyze the results from RazorWire, one thing we do is rank each stock in terms of amount of news coverage. Recently, JNJ has been less covered in the news compared to the rest of our universe of stocks. We consider JNJ as Undervalued at the current price of $62.60. According to our methodology, this stock has appreciation potential based on current fundamentals which only improves if earnings or revenue surprise. The Motley Fool CAPS data suggests that investors believe Johnson & Johnson will beat the market in the foreseeable future.
“… today, 70% of dupont sales overseas, JOHNSON & JOHNSON, 50% overseas. When you have abig producer of china making announcements that. …”