Based on the most recent news and key financial metrics, find out whether Johnson & Johnson stock is a good investment. Find out how Johnson & Johnson ranks on various investment factors. This will help you decide if it is a good stock to invest in.
The latest Johnson & Johnson stock news
Johnson & Johnson’s market capitalization was $397.0 billion as of March 3, 2023. This puts it in the 100th percentile among companies in the Pharmaceuticals sector.
Johnson & Johnson currently has a price-earnings ratio of 22.9. Johnson & Johnson’s 12-month trailing revenue is $94.9 million with an 18.9% profit margin. The year-over-year quarterly sales growth was 4.4% in the most recent quarter. For the current fiscal year, analysts expect adjusted earnings of $10.514 per share. Johnson & Johnson currently pays 2.9% in dividends.
As the world returns to normalcy, there is a greater demand for electives and a better medical utilization, the outlook for the Pharmaceuticals sub-industry looks positive. Pharmaceutical companies are vital in areas such as COVID-19 treatments, oncology, and immunology. If COVID-19 variants keep surfacing, a COVID-19 vaccination could become a seasonal phenomenon much like the flu vaccine. It would be very profitable for pharmaceutical companies as it would result in recurring sales. Recent FDA recommendations such as the approval of a fourth booster dose to be given to people 50 years and older suggest that we are moving in this direction. Due to the lower cost of emerging markets, generic drug makers will continue to struggle. However, there are still policy risks. As both sides seek to provide affordable drug prices, lower drug prices is a bipartisan issue. This creates uncertainty over the long-term but it is unlikely legislation will be passed due to other pressing political issues. The S&P Pharmaceuticals Index increased 1.5% year-to-date, compared to a decline of 13.6% for the S&P Composite 1500 Index. The S&P Pharmaceuticals Index saw a 21.8% gain in 2021, compared to a loss of 26.7% for S&P Composite 1500.
Grading Johnson & Johnson Stock
You will need to understand how Johnson & Johnson stock has been graded before you decide to purchase, sell, or hold it. Stock evaluation requires accessing large amounts of data, the knowledge and time to sort through it all, make sense of financial ratios and read income statements, and analyze recent stock movements. We developed A+ Investor to help investors make decisions about whether to purchase (JNJ stock) stock. This data suite is easy to use and can be customized for any investor’s needs.
our stock grades are available with A+ Investor. These grades provide intuitive A-F grades that correspond to five important investing factors: quality, value, growth, momentum and earnings revisions. We’ll be looking at Johnson & Johnson stock grades for quality, growth, and value.
Johnson & Johnson Stock Value Grading
Stock investing is about buying low and selling high. This makes stock valuation an important consideration. You will need to determine if Johnson & Johnson stock should be bought or sold.
Stocks that are expected to rise are usually bought at a lower price, even though momentum investors might argue otherwise.
Our A+ Investor Grade is calculated from a stock’s value score. The value score is the percentile rank of the average of the percentile ranks of the price-to-sales ratio, price-earnings ratio, enterprise-value-to-EBITDA (EV/EBITDA) ratio, shareholder yield, price-to-book-value ratio and price-to-free-cash-flow ratio. Variable scores can take into account all six ratios. If any one of these ratios is invalid, it will consider the other valid ratios. Stocks must have at least one of the six valuation ratios and a valid (non null) ratio.
Stocks with a value score of 81-100 are deep-value stocks, while those with scores between 61 and 80 are value stocks.
Johnson & Johnson has a Value score of 23 which is Expensive.
Johnson & Johnson Stock Growth Grade
Growth investing starts with finding stocks that show strong, consistent, and long-lasting growth. This is the foundation of growth investing.
In order to compute the Growth Score and assign it a letter grade, the percentile ranks for each of the three individual components-consistency of annual sales growth, five-year sales growth rankings adjusted for extreme levels, and consistency of positive annual cash from operations-must be determined. To create an equal distribution, these three rank numbers are combined and ranked against all stock universes to calculate a company’s growth score.
Companies in the bottom 20% receive Growth Grades F, which is considered Very Weak. Companies in the top 20% are awarded A grades, which are very strong.
Johnson & Johnson has a Growth score of 89 which is Very Strong.
Johnson & Johnson Stock Quality Grading
Our A+ investor Quality Grade is derived from key metrics and the percentile rank. The Quality Grade is the percentage rank of the average percentile ranks for return on assets (ROA), returns on invested capital (ROIC), and gross profit relative assets. It also includes buyback yield, change of total liabilities, accruals, Z prime bankruptcy risk score (Z) and F-Score.
Variable scores can be used to consider any eight measures. However, if any one of these measures is invalid, it will still take into account the other valid measures. Stocks must have at least one valid measure (non-null), and the corresponding ranking for at most four of eight quality measures in order to be given a Quality Score.
The Quality Score measures the stock’s underlying quality. Stocks with a higher Quality Score have greater upside potential and lower downside risk. The Quality Grade was backtested and found that stocks with higher quality stocks performed better than stocks with lower grades from 1998 to 2019.
Stocks are given better grades (higher score) when they have higher quality subcomponent scores. However, stocks get lower grades (lower score) when they have lower subcomponent scores.
Johnson & Johnson has a Quality score of 92 which is Very Strong.
Johnson & Johnson Stock Momentum Grade
Stocks with unusually high rates of return are identified by their momentum grades. Research shows that stocks with high relative momentum levels tend to outperform others, while stocks with lower momentum levels tend to continue to underperform. Momentum measures the stock’s price change over a specific period of time relative to all other stocks.
We typically looks at the relative strength weighted over the preceding four quarters. The relative price change over the four previous quarters is what makes up the weighted relative strength rank. The weighting given to the most recent quarterly price change is 40%, and each quarter prior is 20%.
Johnson & Johnson has a Momentum Score 39, which is Weak.
Other Johnson & Johnson Stock Gradings
A+ Investor offers grades for Estimate Revisions in addition to Quality, Value, Growth, Momentum, and Quality.
The Earnings Estimates Revisions Grade measures the company’s earnings surprise over its previous two fiscal quarters. Surprises often lead to more surprises or even continued sales growth. However, the opposite is also true. Our stock screen, which follows companies with the highest earnings estimates revisions (i.e. the best grades), has a 23.3% annual backtested return since inception. A screen that follows those with the lowest revisions has a lower annual backtested return of 5%.
This combination of the 1 key factors gives you a complete view of a stock. A+ Investor allows you to see if Johnson & Johnson stock passes any of the 60+ stock screens. These stock screens have outperformed all other markets since their inception.
Should I buy Johnson & Johnson stock?
Johnson & Johnson stock overall has a Value grade of D, Growth grade of A and Quality grade of A.
Whether you buy Johnson & Johnson stock or not will depend on your goals, risk tolerance, and allocation. We can help determine which investments are most appropriate for you and assist you in determining these factors.
It is important to compare a stock against other stocks in the same industry. The table below shows how Johnson & Johnson stocks compare to its peers. Click on any of the tickers below to view their stock grades for momentum, value, quality, and revisions to EPS.
Johnson & Johnson Stock: Bottom line
To determine if Johnson & Johnson stock is a good investment, you can look at how it has been graded. You should make a decision about whether Johnson & Johnson stock to buy, sell, or hold based upon a combination of grades and metrics, ratios, and U.S Securities and Exchange Commission reports.
We encourage investors do their own research and to conduct their own due diligence. This will allow you to manage your wealth and not rely on others. We provides timeless articles about financial planning and stock-picking as well as unbiased research and actionable analysis to help you become a better investor.
If you are still unsure whether Johnson & Johnson stock should be bought, sold, or held, our extensive and robust screening tools such as A+ Investor can help you make your decision.
A+ Investor is a powerful data suite that allows you to make better investment decisions, identify stocks, mutual funds, or exchange-traded funds (ETFs), and analyze your portfolio more closely.
