Mead Johnson Nutrition Co

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MJN : NYSE : Consumer Goods
$70.39 -0.2 | -0.28%
Today's Range: 70.13 - 70.99
Avg. Daily Volume: 1882000.0
01/13/17 - 4:02 PM ET

Financial Analysis


MEAD JOHNSON NUTRITION CO's gross profit margin for the third quarter of its fiscal year 2016 is essentially unchanged when compared to the same period a year ago. Sales and net income have dropped, although the growth in revenues underperformed the average competitor within the industry, the net income growth did not. MEAD JOHNSON NUTRITION CO has strong liquidity. Currently, the Quick Ratio is 1.82 which shows the ability to cover short-term cash needs. The company's liquidity has increased from the same period last year, indicating improving cash flow.

At the same time, stockholders' equity ("net worth") has significantly decreased by 236.13% from the same quarter last year. The key liquidity measurements indicate that the company is unlikely to face financial difficulties in the near future.

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Income Statement Q3 FY16 Q3 FY15
Net Sales ($mil)937.5977.5
EBITDA ($mil)257.1257.4
EBIT ($mil)232.0232.8
Net Income ($mil)149.3155.2


Balance Sheet Q3 FY16 Q3 FY15
Cash & Equiv. ($mil)1843.21363.5
Total Assets ($mil)4193.73777.9
Total Debt ($mil)3010.21840.8
Equity ($mil)-478.5351.5


Profitability Q3 FY16 Q3 FY15
Gross Profit Margin67.0867.04
EBITDA Margin27.4226.33
Operating Margin24.7523.82
Sales Turnover0.911.11
Return on Assets12.0418.1
Return on Equity0.0194.56
Debt Q3 FY16 Q3 FY15
Current Ratio2.242.04
Debt/Capital1.190.84
Interest Expense29.816.8
Interest Coverage7.7913.86


Share Data Q3 FY16 Q3 FY15
Shares outstanding (mil)184.8197.1
Div / share0.410.41
EPS0.80.77
Book value / share-2.591.78
Institutional Own % n/a n/a
Avg Daily Volume1881985.01391575.0

Valuation


HOLD. The current P/E ratio indicates a significant discount compared to an average of 36.79 for the Food Products industry and a value on par with the S&P 500 average of 25.49. Normally, for additional comaprison, we would look at the price-to-book ratio; however, this company's price-to-book ratio is negative making the value useless for comparisons. The price-to-sales ratio is well above both the S&P 500 average and the industry average, indicating a premium. Upon assessment of these and other key valuation criteria, MEAD JOHNSON NUTRITION CO proves to trade at a discount to investment alternatives within the industry.


Price/Earnings
1 2 3 4 5
premium   discount
  Price/Cash Flow
1 2 3 4 5
premium   discount
MJN 26.24 Peers 36.79   MJN 15.50 Peers 17.98

Discount. A lower P/E ratio than its peers can signify a less expensive stock or lower growth expectations.

MJN is trading at a significant discount to its peers.

 

Discount. The P/CF ratio, a stock’s price divided by the company's cash flow from operations, is useful for comparing companies with different capital requirements or financing structures.

MJN is trading at a discount to its peers.

 
Price/Projected
Earnings
1 2 3 4 5
premium   discount
  Price to
Earnings/Growth
1 2 3 4 5
premium   discount
MJN 20.14 Peers 22.09   MJN 4.77 Peers 1.93

Average. An average price-to-projected earnings ratio can signify an industry neutral stock price and average future growth expectations.

MJN is trading at a valuation on par with its peers.

 

Premium. The PEG ratio is the stock’s P/E divided by the consensus estimate of long-term earnings growth. Faster growth can justify higher price multiples.

MJN trades at a significant premium to its peers.

 
Price/Book
1 2 3 4 5
premium   discount
  Earnings Growth
1 2 3 4 5
lower   higher
MJN NM Peers 4.93   MJN -20.18 Peers 203.26

Neutral. A lower price-to-book ratio makes a stock more attractive to investors seeking stocks with lower market values per dollar of equity on the balance sheet.

MJN's P/B is negative making this valuation measure meaningless.

 

Lower. Elevated earnings growth rates can lead to capital appreciation and justify higher price-to-earnings ratios.

However, MJN is expected to significantly trail its peers on the basis of its earnings growth rate.

 
Price/Sales
1 2 3 4 5
premium   discount
  Sales Growth
1 2 3 4 5
premium   discount
MJN 3.43 Peers 2.30   MJN -9.30 Peers 25.88

Premium. In the absence of P/E and P/B multiples, the price-to-sales ratio can display the value investors are placing on each dollar of sales.

MJN is trading at a significant premium to its industry.

 

Lower. A sales growth rate that trails the industry implies that a company is losing market share.

MJN significantly trails its peers on the basis of sales growth

 

 

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