With a current market capitalization of $458 billion, the American group Johnson & Johnson ranks in the top 10 of the world's largest companies.
Johnson & Johnson is the world leader in the pharmaceutical, health, and surgical tools sector, not to mention hygiene and beauty products for mass distribution.
Discover our analysis of Johnson & Johnson: its profile, its current share price, its successes, as well as its products.
Also find in this article the analysis of the stock market performance of the Johnson & Johnson share as well as our study of its financial results over 10 years, followed by those of the first half of 2022 which were published on July 19, 2022, then our study of its main stock market ratios.
Finally, we will ask ourselves whether or not it may be interesting to invest in the Johnson & Johnson stock market.
Johnson & Johnson stock price
Infographic: key figures of the Johnson & Johnson group
- $460 billion: market capitalization as of July 18, 2022
- $20.9 billion: Johnson & Johnson Group 2021 profit
- Top 10 of the world's largest groups
- 2.4%: current dividend yield
- 1886: year of creation of the Johnson & Johnson group
Johnson & Johnson: World No. 1 in healthcare
The beginnings of Johnson & Johnson
The history of Johnson & Johnson begins 130 years ago, thanks to the surgical antiseptics resulting from the work of Joseph Lister. Thus, in 1885, Robert Wood Johnson and his two brothers had the idea of developing sterile surgical bandages. This was the beginning of Johnson & Johnson's success, a success that continued with the launch of the range of baby powders developed as far back as 1893.
Johnson & Johnson knew from the beginning of the 20th century to come to the aid of populations during significant events in history: during the First World War, Johnson & Johnson supplied soldiers with first aid products, and in 1918, during the great Spanish flu pandemic, Johnson & Johnson produces large quantities of protective masks.
These two events were just a few examples of Johnson & Johnson's successes over the past 130 years.
Johnson & Johnson today
With $93.8 billion in sales in 2021 for a profit of $20.88 billion, the Johnson & Johnson empire is present in most countries of the world.
Its 2021 turnover breaks down as follows:
- $47.2 billion in the United States (50.31%);
- $23.6 billion in Europe (25.16%);
- $17.3 billion in Asia/Pacific (18.44%);
- $5.7 billion in the rest of the world (6.07%).
The 3 segments of the Johnson & Johnson group
Pharmaceuticals: $52.08 billion in 2021 sales (55%)
With its subsidiary Janssen, the Johnson & Johnson group develops and markets drugs and vaccines relating to the main pathologies: immunology, vaccines (including those related to Covid-19), infectious diseases, neurosciences; oncology; hematology; pulmonary hypertension; cardiovascular and metabolic diseases.
Consumer Health: 2021 revenue of $14.64 billion (16%)
Within this segment, Johnson & Johnson invents and distributes consumer products for health and beauty such as feminine hygiene, first aid products (dressings, disinfectants, etc.), oral hygiene, and beauty products.
Medical products: $27.06 billion in 2021 sales (29%)
Johnson & Johnson Medtech develops and markets surgical products for hospitals. Of particular note are the tools related to general and orthopedic surgery. The group also specializes in treatment devices for cardiac arrhythmias, strokes, and neurovascular pathologies.
Johnson & Johnson Medtech also develop eye health applications.
Johnson & Johnson financial results
Johnson & Johnson 10-year revenue chart
Over the past 10 years, Johnson & Johnson's turnover has fluctuated between 67.2 and 93.8 billion dollars. It is generally on an upward trend between 2012 and 2021, rising from $67.2 billion in 2012 to $93.8 billion in 2021, i.e. growth of +40% over 10 years.
Johnson & Johnson 10-Year Earnings Chart
Over the past 10 years, Johnson & Johnson's net profit has grown, rising from $10.9 billion in 2012 to $20.9 billion in 2021, representing a growth of +92% over 10 years.
Only the year 2017 shows a profit reduced to $1.3 billion, a result which is explained by a high provision for income tax of $16.37 billion but which does not call into question the efficiency of group operations.
Johnson & Johnson First Half 2022 Results
The results for the 2nd quarter of 2022 and the first half of 2022 were published on July 19, 2022. The results show revenue growth of +4%, but a reduction in net profit:
$45.63 billion versus $47.45 billion in revenue between the first half of 2021 and the first half of 2022 (+4.0%);
$12.75 billion versus $9.96 billion in net profit between the first half of 2021 and the first half of 2022 (-20.1%).
This decline in net profit for the first half of 2022 is not due to a reduction in the operational efficiency of the Johnson & Johnson group but is mainly explained by the item in the income statement "Other (Income) expense". and expenses) that generated an exceptional profit for the first half of 2021.
Note also an increase of $593 million in R&D between the first half of 2021 and the first half of 2022.
Dividend Johnson & Johnson
Johnson & Johnson 10-Year Dividend Chart
Johnson & Johnson is on the list of America's 65 Dividend Aristocrats.
The Johnson & Johnson dividend increased from $2.40 per share in 2012 to $4.19 in 2021, representing a growth of +74.6%.
Johnson & Johnson's stock yield is currently 2.40% at its stock price of $174.23 on July 18, 2022.
Johnson & Johnson shares: analysis of financial results and stock market valuation
Johnson & Johnson: our study of financial ratios
Johnson & Johnson presents the following ratios at its current share price of $174.23 as of July 18, 2022:
- a 2021 EPS (Earnings Per Share) set at $7.93, i.e. a profit return on 2021 EPS of 4.6%;
- shareholders' equity of $74.02 billion, well below its current market capitalization of $458 billion;
- a reasonable financial debt to equity ratio of 0.46.
Graphical analysis of the Johnson & Johnson stock price on the stock market in the long term
Johnson & Johnson 20-year stock price chart
Between the beginning of 2000 and the end of 2012, the Johnson & Johnson share price rose from $48.5 to $71.6 (+48%) to then intensify its growth and settle at $174.2 in this mid-July 2022.
Apart from a few bumps in 2009, 2015, 2018, and 2020, the megatrend for Johnson & Johnson stock is clearly bullish. Moreover, Johnson & Johnson stock is currently close to its all-time high reached on April 25, 2022, at $186.
Should you invest in the Johnson & Johnson stock market?
The Johnson & Johnson group has impressive profit margins on sales for a mature group of this size operating in a “consumer consumer” sector:
- 22.3% in 2021;
- 17.8% in 2020;
- 18.4% in 2019;
- 18.8% in 2018.
Things get complicated when you look at the $460 billion market capitalization of the Johnson & Johnson group. Johnson & Johnson's PER currently stands at 27.9 (on average over the last 4 years).
In other words, the investor currently interested in Johnson & Johnson shares is paying on the stock exchange for his shares for almost 30 years of the value of his annual profits. This ratio seems too high, even taking into account the growth of the EPS (Earnings Per Share) of the Johnson & Johnson group of +10% per year (on average over 10 years, not capitalized).
By way of comparison, and in order to cite examples of large French groups known to the general public, a few months ago, big names among the world leaders in their sectors such as AXA and TotalEnergies could still be acquired at PER levels less than 10.
The same observation regarding the Johnson & Johnson dividend yield: at less than 2.5%, it seems to us a bit low for an investment approach based on the dividend yield.
Although the Johnson & Johnson group has excellent profit margins, the Johnson & Johnson stock currently seems too well valued to us.
Disclaimer:
All of our information is, by nature, generic. They do not take into account your personal situation and do not in any way constitute personalized recommendations with a view to carrying out transactions and cannot be assimilated to a financial investment advisory service, nor to any incentive to buy or sell instruments.
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