Assessing Johnson & Johnson’s Performance Against Competitors In Pharmaceuticals Industry

Mar 25, 2024

In the fast-paced and cutthroat world of business, conducting thorough company analysis is essential for investors and industry experts. In this article, we will undertake a comprehensive industry comparison, evaluating Johnson & Johnson (NYSE:JNJ) in comparison to its major competitors within the Pharmaceuticals industry. By analyzing crucial 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 29.85 5.44 4.67 5.78% $6.82 $14.6 7.3%
Eli Lilly and Co 132.86 67.97 20.40 19.91% $3.03 $7.57 28.1%
Novo Nordisk A/S 47.15 36.77 16.99 22.01% $28.51 $55.85 36.95%
Merck & Co Inc 884.64 8.35 5.25 -3.11% $-0.77 $10.72 5.78%
AstraZeneca PLC 34.78 5.25 4.52 2.52% $2.18 $9.72 7.29%
Novartis AG 23.47 4.21 4.31 19.99% $4.18 $8.75 7.39%
Pfizer Inc 73.95 1.74 2.64 -3.62% $-1.77 $6.69 -41.34%
Sanofi SA 20.44 1.48 2.38 -0.75% $0.42 $8.15 6.5%
Bristol-Myers Squibb Co 13.45 3.57 2.40 6.03% $4.45 $8.73 0.62%
GSK PLC 13.80 5.07 2.24 2.64% $1.16 $5.63 9.16%
Zoetis Inc 33.31 15.48 9.14 10.42% $0.83 $1.49 8.48%
Takeda Pharmaceutical Co Ltd 38.64 1.01 1.65 1.53% $314.89 $731.71 1.33%
Viatris Inc 236.80 0.69 0.93 -3.7% $-0.07 $1.6 -1.0%
Dr Reddy’s Laboratories Ltd 19.48 3.79 3.75 5.29% $22.42 $42.2 6.57%
Jazz Pharmaceuticals PLC 19.97 2.03 2.29 2.61% $0.29 $0.9 4.1%
Average 113.77 11.24 5.64 5.84% $27.13 $64.27 5.71%

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By thoroughly analyzing Johnson & Johnson, we can discern the following trends:

  • The stock’s Price to Earnings ratio of 29.85 is lower than the industry average by 0.26x, suggesting potential value in the eyes of market participants.

  • Considering a Price to Book ratio of 5.44, which is well below the industry average by 0.48x, the stock may be undervalued based on its book value compared to its peers.

  • With a relatively low Price to Sales ratio of 4.67, which is 0.83x the industry average, the stock might be considered undervalued based on sales performance.

  • 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 Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $6.82 Billion is 0.25x below the industry average, suggesting potential lower profitability or financial challenges.

  • The company has lower gross profit of $14.6 Billion, which indicates 0.23x below the industry average. This potentially indicates lower revenue after accounting for production costs.

  • The company is experiencing remarkable revenue growth, with a rate of 7.3%, outperforming the industry average of 5.71%.

Debt To Equity Ratio

debt to equity

The debt-to-equity (D/E) ratio is an important measure to assess the financial structure and risk profile of a company.

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 exhibits a stronger financial position compared to its top 4 peers in the sector, as indicated by its lower debt-to-equity ratio of 0.43.

  • This suggests that the company has a more favorable balance between debt and equity, which can be seen as a positive aspect for 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, and gross profit suggest lower profitability levels. On the positive side, the high revenue growth rate stands out, showing strong potential for future performance compared to industry peers.

This article was generated by Benzinga’s automated content engine and reviewed by an editor.

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