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Johnson and Johnson Beats Estimates and Raises Guidance
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Johnson and Johnson (JNJ - Free Report) reported Q1 2023 earnings on Tuesday, April 18 before the market opened. The report showed strong top and bottom-line growth, and with the reasonable valuation JNJ currently maintains, it demonstrates some very appealing characteristics.
“Our first quarter results demonstrate strong performance across all three segments of our business…”
Adjusted Earnings per share of $2.68 beats analysts’ estimate of $2.51
EPS increased 0.4% YoY from $2.67
Sales of $24.75 billion beat analysts' estimate of $23.61 billion
Sales increased 5.6% YoY from $23.43 billion
Johnson and Johnson management is “responsibly optimistic” and raise FY23 guidance midpoints from $10.45 - $10.65 per share to $10.60 -$10.70 per share
Following the earnings announcement Johnson and Johnson stock is trading lower by -2.5%. JNJ stock is down -8% YTD, underperforming the industry and broad market.
Image Source: Zacks Investment Research
Business Segment Breakdown
Johnson and Johnson is a deeply diversified business, comprised of some 250 subsidiaries. JNJ reports earnings through three primary business segments: Consumer Health, Pharmaceutical, and MedTech.
Consumer Health, which JNJ plans to spin out into its own separate publicly traded company later this year, reported sales of $3.9 billion, for a YoY increase of 7.4%. Growth was driven by increased sales in Tylenol, Imodium, smoking cessation products, and Neutrogena and Aveeno skin health products.
Pharmaceutical sales experienced a 4.2% YoY growth in sales to $13.4 billion. Growth was driven by DARZALEX, a biologic for the treatment of multiple myeloma, and STELARA a biologic for the treatment of a number of immune mediated inflammatory diseases. Continued Covid-19 vaccine sales also contributed to growth.
MedTech sales climbed 7.3% YoY to $7.5 billion. Sales growth was driven primarily by electrophysiology products, contact lenses, wound closure products, and knees in Orthopedics.
Valuation
JNJ is trading at a one-year forward earnings multiple of 16x, which is below the industry average of 19x, and below its five-year median of 17x. Additionally, JNJ currently has a Zacks Rank #3 (Hold), indicating a mixed earnings revisions trend. However, with the fresh guidance higher in earnings, it is likely that analysts will soon be upgrading earnings expectations.
Image Source: Zacks Investment Research
Dividend
Johnson and Johnson board approved a 5.3% increase in its quarterly dividend payment. The stock now boasts a dividend yield of $2.9%. JNJ has raised its dividend for 60 consecutive years now, which makes it part of the exclusive Dividend Kings club.
Outlook
Johnson and Johnson is an exceptional business and stock, with steady, low volatility returns over the last 25 years. Tuesday morning’s earnings report reiterated the strength of the business currently and set the tone for the future.
Image Source: Zacks Investment Research
The encouraging guidance is just the first of several bullish catalysts. JNJ has a deep pipeline of exciting new pharmaceuticals, large acquisitions from the last couple years to bolster sales, and a favorable debt profile.
With a below historical median valuation and improving earnings JNJ looks like a very appealing stock for investors.
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Johnson and Johnson Beats Estimates and Raises Guidance
Johnson and Johnson (JNJ - Free Report) reported Q1 2023 earnings on Tuesday, April 18 before the market opened. The report showed strong top and bottom-line growth, and with the reasonable valuation JNJ currently maintains, it demonstrates some very appealing characteristics.
“Our first quarter results demonstrate strong performance across all three segments of our business…”
Following the earnings announcement Johnson and Johnson stock is trading lower by -2.5%. JNJ stock is down -8% YTD, underperforming the industry and broad market.
Image Source: Zacks Investment Research
Business Segment Breakdown
Johnson and Johnson is a deeply diversified business, comprised of some 250 subsidiaries. JNJ reports earnings through three primary business segments: Consumer Health, Pharmaceutical, and MedTech.
Consumer Health, which JNJ plans to spin out into its own separate publicly traded company later this year, reported sales of $3.9 billion, for a YoY increase of 7.4%. Growth was driven by increased sales in Tylenol, Imodium, smoking cessation products, and Neutrogena and Aveeno skin health products.
Pharmaceutical sales experienced a 4.2% YoY growth in sales to $13.4 billion. Growth was driven by DARZALEX, a biologic for the treatment of multiple myeloma, and STELARA a biologic for the treatment of a number of immune mediated inflammatory diseases. Continued Covid-19 vaccine sales also contributed to growth.
MedTech sales climbed 7.3% YoY to $7.5 billion. Sales growth was driven primarily by electrophysiology products, contact lenses, wound closure products, and knees in Orthopedics.
Valuation
JNJ is trading at a one-year forward earnings multiple of 16x, which is below the industry average of 19x, and below its five-year median of 17x. Additionally, JNJ currently has a Zacks Rank #3 (Hold), indicating a mixed earnings revisions trend. However, with the fresh guidance higher in earnings, it is likely that analysts will soon be upgrading earnings expectations.
Image Source: Zacks Investment Research
Dividend
Johnson and Johnson board approved a 5.3% increase in its quarterly dividend payment. The stock now boasts a dividend yield of $2.9%. JNJ has raised its dividend for 60 consecutive years now, which makes it part of the exclusive Dividend Kings club.
Outlook
Johnson and Johnson is an exceptional business and stock, with steady, low volatility returns over the last 25 years. Tuesday morning’s earnings report reiterated the strength of the business currently and set the tone for the future.
Image Source: Zacks Investment Research
The encouraging guidance is just the first of several bullish catalysts. JNJ has a deep pipeline of exciting new pharmaceuticals, large acquisitions from the last couple years to bolster sales, and a favorable debt profile.
With a below historical median valuation and improving earnings JNJ looks like a very appealing stock for investors.