Amidst today's fast-paced and highly competitive business environment, it is crucial for investors and industry enthusiasts to conduct comprehensive company evaluations. In this article, we will delve into an extensive industry comparison, evaluating Johnson & Johnson JNJ in comparison to its major competitors within the Pharmaceuticals industry. By analyzing critical financial metrics, market position, and growth potential, our objective is to provide valuable insights for investors and offer a deeper understanding of company's performance in the industry.
Johnson & Johnson Background
Johnson & Johnson is the world's largest and most diverse healthcare firm. Three divisions make up the firm: pharmaceutical, medical devices and diagnostics, and consumer. The drug and device groups represent close to 80% of sales and drive the majority of cash flows for the firm. The drug division focuses on the following therapeutic areas: immunology, oncology, neurology, pulmonary, cardiology, and metabolic diseases. The device segment focuses on orthopedics, surgery tools, vision care, and a few smaller areas. The last segment of consumer focuses on baby care, beauty, oral care, over-the-counter drugs, and women's health. The consumer group is being divested in 2023 under the new name Kenvue. Geographically, just over half of total revenue is generated in the United States.
| Company | P/E | P/B | P/S | ROE | EBITDA (in billions) | Gross Profit (in billions) | Revenue Growth |
|---|---|---|---|---|---|---|---|
| Johnson & Johnson | 29.15 | 5.31 | 4.56 | 5.78% | $6.82 | $14.6 | 7.3% |
| Eli Lilly and Co | 134.02 | 68.61 | 20.58 | 19.91% | $3.03 | $7.57 | 28.1% |
| Novo Nordisk A/S | 47.12 | 36.74 | 16.98 | 22.01% | $28.51 | $55.85 | 36.95% |
| Merck & Co Inc | 904 | 8.53 | 5.36 | -3.11% | $-0.77 | $10.72 | 5.78% |
| AstraZeneca PLC | 35.53 | 5.36 | 4.62 | 2.52% | $2.18 | $9.72 | 7.29% |
| Novartis AG | 23.29 | 4.18 | 4.28 | 19.99% | $4.18 | $8.75 | 7.39% |
| Pfizer Inc | 71.84 | 1.69 | 2.56 | -3.62% | $-1.77 | $6.69 | -41.34% |
| Sanofi SA | 20.22 | 1.47 | 2.35 | -0.75% | $0.42 | $8.15 | 6.5% |
| Bristol-Myers Squibb Co | 13.24 | 3.52 | 2.36 | 6.03% | $4.45 | $8.73 | 0.62% |
| GSK PLC | 13.48 | 4.95 | 2.19 | 2.64% | $1.16 | $5.63 | 9.16% |
| Zoetis Inc | 32.68 | 15.18 | 8.96 | 10.42% | $0.83 | $1.49 | 8.48% |
| Takeda Pharmaceutical Co Ltd | 36.86 | 0.96 | 1.57 | 1.53% | $314.89 | $731.71 | 1.33% |
| Viatris Inc | 234.80 | 0.68 | 0.92 | -3.7% | $-0.07 | $1.6 | -1.0% |
| Dr Reddy's Laboratories Ltd | 19.64 | 3.82 | 3.78 | 5.29% | $22.42 | $42.2 | 6.57% |
| Jazz Pharmaceuticals PLC | 18.87 | 1.92 | 2.16 | 2.61% | $0.29 | $0.9 | 4.1% |
| Average | 114.68 | 11.26 | 5.62 | 5.84% | $27.13 | $64.27 | 5.71% |
By closely studying Johnson & Johnson, we can observe the following trends:
-
At 29.15, the stock's Price to Earnings ratio is 0.25x less than the industry average, suggesting favorable growth potential.
-
Considering a Price to Book ratio of 5.31, which is well below the industry average by 0.47x, the stock may be undervalued based on its book value compared to its peers.
-
Based on its sales performance, the stock could be deemed undervalued with a Price to Sales ratio of 4.56, which is 0.81x the industry average.
-
The Return on Equity (ROE) of 5.78% is 0.06% below the industry average, suggesting potential inefficiency in utilizing equity to generate profits.
-
The company has lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $6.82 Billion, which is 0.25x below the industry average. This potentially indicates lower profitability or financial challenges.
-
With lower gross profit of $14.6 Billion, which indicates 0.23x below the industry average, the company may experience lower revenue after accounting for production costs.
-
The company's revenue growth of 7.3% is notably higher compared to the industry average of 5.71%, showcasing exceptional sales performance and strong demand for its products or services.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio provides insights into the proportion of debt a company has in relation to its equity and asset value.
Considering the debt-to-equity ratio in industry comparisons allows for a concise evaluation of a company's financial health and risk profile, aiding in informed decision-making.
By evaluating Johnson & Johnson against its top 4 peers in terms of the Debt-to-Equity ratio, the following observations arise:
-
Johnson & Johnson is in a relatively stronger financial position compared to its top 4 peers, as evidenced by its lower debt-to-equity ratio of 0.43.
-
This implies that the company relies less on debt financing and has a more favorable balance between debt and equity.
Key Takeaways
For Johnson & Johnson in the Pharmaceuticals industry, the PE, PB, and PS ratios are all low compared to its peers, indicating potential undervaluation. However, the low ROE, EBITDA, and gross profit suggest lower profitability and operational efficiency. On a positive note, the high revenue growth implies strong top-line performance compared to industry peers. Overall, Johnson & Johnson shows mixed performance in terms of valuation and financial metrics within the Pharmaceuticals sector.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
