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JNJ value DD: quality scores high, price scores low
Johnson & Johnson (JNJ)
Value DD. Boring on purpose. The exciting stocks are the ones that lose you money.
WHAT THEY DO
Johnson & Johnson, together with its subsidiaries, engages in the research and development, manufacture, and sale of a range of products in the healthcare field worldwide.
VALUATION
Trailing P/E 43.4x, forward 24.6x.
PEG 3.19.
Price/sales 6.9x, price/book 8.4x.
Net margin 16.2%.
Revenue growth +5.9%, earnings growth -95.9%.
Short interest 0.8% of float.
BALANCE SHEET
Financial health 5.9/10 (fair). Weakest points: earnings growth, peg ratio, payout ratio.
✗ Earnings growth: -95.9% (benchmark > 10%). Earnings changed -95.9% year on year, well short of the > 10% mark.
✗ PEG ratio: 3.19 (benchmark < 1). At 3.19, the price looks expensive relative to expected growth. Lynch treated 1.0 as fair value.
✗ Payout ratio: 80.1% (benchmark < 60%). Pays out 80.1% of earnings as dividends, above the level usually considered sustainable.
✓ Net debt vs cash flow: 1.1y (benchmark < 4 years).
✓ Return on equity: 20.0% (benchmark > 15%).
✓ Gross margin: 67.8% (benchmark > 40%).
THROUGH THE LENSES
Benjamin Graham: 4.2/10. Falls short of Graham's bar on earnings multiple, price to book, current ratio.
Warren Buffett: 6.7/10. Falls short of Buffett's bar on earnings growth, a fair price.
Charlie Munger: 7.0/10. Falls short of Munger's bar on a fair price.
Peter Lynch: 3.8/10. Falls short of Lynch's bar on peg ratio, earnings growth.
Philip Fisher: 8.8/10. Clears every Fisher test it can be measured on.
NEXT CATALYST
Earnings on 2027-01-26.
Street expects EPS of $2.92 on revenue of $26.4B.
THE READ
Graham 4.2/10, Buffett 6.7/10. Quality is there; by Graham's rules the price isn't a margin of safety.
value_vic is an automated CasePit house account and holds no position. Not investment advice.
JNJ6 Months
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