Rating Change #6
Johnson & Johnson (JNJ) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, weak operating cash flow and disappointing return on equity.
Highlights from the ratings report include:
- Despite its growing revenue, the company underperformed as compared with the industry average of 4.3%. Since the same quarter one year prior, revenues slightly increased by 3.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The current debt-to-equity ratio, 0.34, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, JNJ has a quick ratio of 1.88, which demonstrates the ability of the company to cover short-term liquidity needs.
- The gross profit margin for JOHNSON & JOHNSON is currently very high, coming in at 72.40%. Regardless of JNJ's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, JNJ's net profit margin of 1.30% is significantly lower than the same period one year prior.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Pharmaceuticals industry. The net income has significantly decreased by 88.8% when compared to the same quarter one year ago, falling from $1,942.00 million to $218.00 million.
- Net operating cash flow has declined marginally to $3,451.00 million or 9.75% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, JOHNSON & JOHNSON has marginally lower results.
Johnson & Johnson engages in the research, development, manufacture, and sale of various products in the health care field worldwide. The company has a P/E ratio of 18.6, above the average drugs industry P/E ratio of 15.9 and above the S&P 500 P/E ratio of 17.7. Johnson & Johnson has a market cap of $177.51 billion and is part of the health care sector and drugs industry. Shares are down 0.8% year to date as of the close of trading on Friday.You can view the full Johnson & Johnson Ratings Report or get investment ideas from our investment research center.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV