In today's fast-paced and competitive business landscape, it is essential for investors and industry enthusiasts to thoroughly analyze companies before making investment decisions. In this article, we will conduct a comprehensive industry comparison, evaluating Johnson & Johnson JNJ against its key competitors in the Pharmaceuticals industry. By examining key financial metrics, market position, and growth prospects, we aim to provide valuable insights for investors and shed light on company's performance within 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 | 22.98 | 5.32 | 4.54 | 4.69% | $5.68 | $14.87 | 2.34% |
| Eli Lilly and Co | 113.40 | 57.12 | 19.36 | 19.02% | $3.12 | $7.09 | 25.98% |
| Novo Nordisk A/S | 45.39 | 40.70 | 16.59 | 24.73% | $36.91 | $55.43 | 22.45% |
| Merck & Co Inc | 145.77 | 8.23 | 5.44 | 12.22% | $6.96 | $12.23 | 8.89% |
| AstraZeneca PLC | 37.98 | 6.37 | 5.05 | 5.69% | $4.47 | $10.46 | 16.55% |
| Novartis AG | 23.31 | 5.27 | 4.46 | 6.23% | $4.66 | $9.02 | 9.71% |
| GSK PLC | 16.29 | 5.22 | 2.37 | 2.64% | $2.07 | $5.39 | 9.16% |
| Zoetis Inc | 33.54 | 15.70 | 9.18 | 11.91% | $0.93 | $1.55 | 9.5% |
| Takeda Pharmaceutical Co Ltd | 44.76 | 0.88 | 1.51 | -0.04% | $186.41 | $668.37 | -5.43% |
| Dr Reddy's Laboratories Ltd | 17.02 | 3.36 | 3.40 | 4.76% | $20.32 | $49.91 | -1.83% |
| Jazz Pharmaceuticals PLC | 22.57 | 1.86 | 1.96 | -0.39% | $0.23 | $0.81 | 1.03% |
| Prestige Consumer Healthcare Inc | 15.50 | 1.95 | 2.88 | 3.04% | $0.09 | $0.15 | -3.11% |
| Corcept Therapeutics Inc | 26.75 | 5.34 | 5.92 | 5.22% | $0.03 | $0.14 | 38.95% |
| Indivior PLC | 424.25 | 229.32 | 2.13 | 940.0% | $0.08 | $0.24 | 12.25% |
| Average | 74.35 | 29.33 | 6.17 | 79.62% | $20.48 | $63.14 | 11.08% |
Upon closer analysis of Johnson & Johnson, the following trends become apparent:
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With a Price to Earnings ratio of 22.98, which is 0.31x less than the industry average, the stock shows potential for growth at a reasonable price, making it an interesting consideration for market participants.
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The current Price to Book ratio of 5.32, which is 0.18x the industry average, is substantially lower than the industry average, indicating potential undervaluation.
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The Price to Sales ratio is 4.54, which is 0.74x the industry average. This suggests a possible undervaluation based on sales performance.
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With a Return on Equity (ROE) of 4.69% that is 74.93% below the industry average, it appears that the company exhibits potential inefficiency in utilizing equity to generate profits.
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With lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $5.68 Billion, which is 0.28x below the industry average, the company may face lower profitability or financial challenges.
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Compared to its industry, the company has lower gross profit of $14.87 Billion, which indicates 0.24x below the industry average, potentially indicating lower revenue after accounting for production costs.
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The company's revenue growth of 2.34% is significantly below the industry average of 11.08%. This suggests a potential struggle in generating increased sales volume.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio is a financial metric that helps determine the level of financial risk associated with a company's capital structure.
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.
In terms of the Debt-to-Equity ratio, Johnson & Johnson stands in comparison with its top 4 peers, leading to the following comparisons:
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Johnson & Johnson demonstrates a stronger financial position compared to its top 4 peers in the sector.
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With a lower debt-to-equity ratio of 0.48, the company relies less on debt financing and maintains a healthier balance between debt and equity, which can be viewed positively by investors.
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, gross profit, and revenue growth suggest underperformance relative to industry standards. This may signal a need for further investigation into the company's operational efficiency and growth strategies.
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.
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