NEW YORK (TheStreet) -- Johnson & Johnson (JNJ) - Get Johnson & Johnson (JNJ) Report stock is gaining 1.41% to $94.13 on heavy trading volume on Tuesday, after its subsidiary McNeil Nutritionals agreed to sell Splenda to Heartland Food Products.
The terms of the deal were not disclosed.
Johnson & Johnson has been seeking a buyer for the sucralose-based artificial sweetener since December, Reuters reports.
Splenda, which makes about $300 million in revenue a year, was created with Tate & Lyle (TATYY) , a British ingredients company that markets the product in Europe and supplies the sucralose.
Tate & Lyle had forecast for a 25% decrease in sucralose prices this year as sales are dragged by a decline in demand for carbonated soft drinks, Reuters added.
Heartland Food is a manufacturer of low calorie sweeteners, creamers, beverage concentrates, coffee and nutritional drinks.
The transaction is expected to close by the end of the year.
Separately, TheStreet Ratings team rates JOHNSON & JOHNSON as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
"We rate JOHNSON & JOHNSON (JNJ) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, notable return on equity, reasonable valuation levels, expanding profit margins and growth in earnings per share. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- JNJ's debt-to-equity ratio is very low at 0.27 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, JNJ has a quick ratio of 1.87, which demonstrates the ability of the company to cover short-term liquidity needs.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Pharmaceuticals industry and the overall market, JOHNSON & JOHNSON's return on equity exceeds that of both the industry average and the S&P 500.
- The gross profit margin for JOHNSON & JOHNSON is currently very high, coming in at 74.88%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 25.38% significantly outperformed against the industry average.
- JOHNSON & JOHNSON has improved earnings per share by 6.6% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, JOHNSON & JOHNSON increased its bottom line by earning $5.70 versus $4.82 in the prior year. This year, the market expects an improvement in earnings ($6.16 versus $5.70).
- You can view the full analysis from the report here: JNJ Ratings Report