Insights Into Johnson & Johnson's Performance Versus Peers In Pharmaceuticals Sector

In the dynamic and fiercely competitive business environment, conducting a thorough analysis of companies is crucial for investors and industry enthusiasts. In this article, we will perform an extensive industry comparison, evaluating Johnson & Johnson JNJ in relation to its major competitors in the Pharmaceuticals industry. By closely examining crucial financial metrics, market position, and growth prospects, we aim to offer 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 30.68 5.59 4.80 5.78% $6.82 $14.6 7.3%
Eli Lilly and Co 131.40 67.23 20.17 19.91% $3.03 $7.57 28.1%
Novo Nordisk A/S 48.66 37.94 17.53 22.01% $28.51 $55.85 36.95%
Merck & Co Inc 882.14 8.32 5.23 -3.11% $-0.77 $10.72 5.78%
AstraZeneca PLC 34.91 5.27 4.53 2.52% $2.18 $9.72 7.29%
Novartis AG 24.56 4.41 4.52 19.99% $4.18 $8.75 7.39%
Pfizer Inc 73.57 1.73 2.63 -3.62% $-1.77 $6.69 -41.34%
Sanofi SA 20.49 1.49 2.38 -0.75% $0.42 $8.15 6.5%
Bristol-Myers Squibb Co 13.94 3.70 2.48 6.03% $4.45 $8.73 0.62%
GSK PLC 14.04 5.12 2.28 2.64% $1.16 $5.63 9.16%
Zoetis Inc 35.93 16.69 9.86 10.42% $0.83 $1.49 8.48%
Takeda Pharmaceutical Co Ltd 38.85 1.02 1.66 1.53% $314.89 $731.71 1.33%
Viatris Inc 245.20 0.71 0.96 -3.7% $-0.07 $1.6 -1.0%
Dr Reddy's Laboratories Ltd 20.23 3.94 3.89 5.29% $22.42 $42.2 6.57%
Jazz Pharmaceuticals PLC 19.27 1.96 2.21 2.61% $0.29 $0.9 4.1%
Average 114.51 11.4 5.74 5.84% $27.13 $64.27 5.71%

By conducting an in-depth analysis of Johnson & Johnson, we can identify the following trends:

  • At 30.68, the stock's Price to Earnings ratio is 0.27x less than the industry average, suggesting favorable growth potential.

  • With a Price to Book ratio of 5.59, significantly falling below the industry average by 0.49x, it suggests undervaluation and the possibility of untapped growth prospects.

  • With a relatively low Price to Sales ratio of 4.8, which is 0.84x 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.

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

Debt To Equity Ratio

The debt-to-equity (D/E) ratio measures the financial leverage of a company by evaluating its debt relative to its equity.

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 light of the Debt-to-Equity ratio, a comparison between Johnson & Johnson and its top 4 peers reveals the following information:

  • Johnson & Johnson has a stronger financial position compared to its top 4 peers, as evidenced 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 perceived as a positive indicator 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, 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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