Johnson & Johnson ($JNJ) Earnings (Q3 FY22)

 Johnson & Johnson ($JNJ) Earnings and Opinion:


Johnson & Johnson is a company in the Healthcare sector and operates in the Drug Manufacturers-General industry. The company researches and develops, manufactures, and sells various products in the healthcare field worldwide. Johnson & Johnson was founded in 1886 and is currently headquartered in New Brunswick, New Jersey. The company made its debut on the stock market in 1944. 

Johnson & Johnson Earnings Results:

  • Revenue of $23.79B beating expectations of $23.394B
  • Adj Gross Margin of 71.89% missing expectations of 73.05%
  • Operating Income of $7.68B beating expectations of $7.678B
  • Operating Margin of 32% missing expectations of 33.66%
  • Adj Diluted EPS of $2.55 beating expectations of $2.50
Opinion:
Johnson & Johnson is currently trading a slight bit lower in todays trading session. The company reported earnings before the market opened this morning. Johnson & Johnson had a solid earnings report, but the main thing that was looked at was the guidance. The company trimmed their guidance a slight bit to adjust for the currency impact that they will face. They have plans to split off their consumer unit at some point in 2023 and call it Kenvue. The company cautioned of problems with inflation, saying that it might dent forward earnings as well. Diving deeper into the earnings, it looks like the company saw a nice beat on the Covid-19 vaccine segment. The margins looks pretty healthy, but may see some dents to them in the coming quarters with the current economic circumstances. It will be interesting to see if they go through with the spinoff, and how that will affect the company because it plays a pivotal role right now. Looking towards valuation, the company seems to be a little overvalued right now. The EV/EBITDA is at 13.16, which is above the peers median at 10.33. The P/E ratio sits at 19.87, which is a little high for this industry. Lastly, the P/FCF is at 21.93 which is 1.5x the median among peers. In my opinion, I see some downside in the company in the near term. The company has mentioned some problems they will deal with in the coming quarters and it will be interesting to see how the company reacts to the spinoff. I think it is a great company though, it is among the top established companies. They have plenty of cash, which has been a theme in past years that allows them to scoop up other companies. I think they have great potential in the long-term, but you can hold off a little bit to scoop it up with a lower valuation. I am long Johnson & Johnson ($JNJ).


*Information from Bloomberg and Yahoo Finance

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