Comparing Johnson & Johnson With Industry Competitors In Pharmaceuticals Industry

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 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 22.18 5.13 4.39 4.69% $5.68 $14.87 2.34%
Eli Lilly and Co 108.24 54.52 18.48 19.02% $3.12 $7.09 25.98%
Novo Nordisk A/S 43.01 38.62 15.72 24.73% $36.91 $55.43 22.45%
AstraZeneca PLC 37.70 6.32 5.01 5.69% $4.47 $10.46 16.55%
Novartis AG 22.11 5 4.23 6.23% $4.66 $9.02 9.71%
GSK PLC 15.94 5.11 2.32 2.64% $2.07 $5.39 9.16%
Zoetis Inc 32.19 15.07 8.81 11.91% $0.93 $1.55 9.5%
Takeda Pharmaceutical Co Ltd 37.03 0.97 1.58 1.53% $314.89 $731.71 1.33%
Viatris Inc 235.60 0.69 0.92 -3.7% $-0.07 $1.6 -1.0%
Dr Reddy's Laboratories Ltd 20.02 3.90 3.85 5.29% $22.42 $42.2 6.57%
Jazz Pharmaceuticals PLC 22.78 1.88 1.98 -0.39% $0.23 $0.81 1.03%
Corcept Therapeutics Inc 23.35 4.66 5.17 6.43% $0.03 $0.13 31.39%
Indivior PLC 448.75 242.93 2.26 940.0% $0.08 $0.24 12.25%
Average 87.23 31.64 5.86 84.95% $32.48 $72.14 12.08%

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

  • A Price to Earnings ratio of 22.18 significantly below the industry average by 0.25x suggests undervaluation. This can make the stock appealing for those seeking growth.

  • The current Price to Book ratio of 5.13, which is 0.16x the industry average, is substantially lower than the industry average, indicating potential undervaluation.

  • Based on its sales performance, the stock could be deemed undervalued with a Price to Sales ratio of 4.39, which is 0.75x the industry average.

  • With a Return on Equity (ROE) of 4.69% that is 80.26% below the industry average, it appears that the company exhibits potential inefficiency in utilizing equity to generate profits.

  • With lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $5.68 Billion, which is 0.17x below the industry average, the company may face lower profitability or financial challenges.

  • The gross profit of $14.87 Billion is 0.21x below that of its industry, suggesting potential lower revenue after accounting for production costs.

  • The company's revenue growth of 2.34% is significantly lower compared to the industry average of 12.08%. This indicates a potential fall in the company's sales performance.

Debt To Equity Ratio

The debt-to-equity (D/E) ratio gauges the extent to which a company has financed its operations through debt relative to 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.

When evaluating Johnson & Johnson alongside its top 4 peers in terms of the Debt-to-Equity ratio, the following insights arise:

  • Johnson & Johnson is in a relatively stronger financial position compared to its top 4 peers, as evidenced by its lower debt-to-equity ratio of 0.48.

  • This implies that the company relies less on debt financing and has a more favorable balance between debt and equity.

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 weaker financial performance relative to industry competitors. This may require further investigation into operational efficiency and growth strategies to enhance overall valuation within the sector.

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

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