What’s Johnson & Johnson’s Valuation?
Johnson & Johnson’s valuation
Johnson & Johnson (JNJ) reported earnings per share (or EPS) of $1.83 on revenues of $18.8 billion in 2Q17. Wall Street analysts expect Johnson & Johnson to report EPS of $1.80 on revenues of $19.3 billion in 3Q17, an 8.2% increase in revenues as compared to 3Q16.
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The above chart shows EPS and revenues for Johnson & Johnson over the last few quarters and estimates for 3Q17.
The price-to-earnings (or PE) multiple shows what one share can buy for an equity investor. As of September 26, 2017, Johnson & Johnson was trading at a forward PE multiple of ~17.2x as compared to the industry average of 16.9x. Other competitors such as Merck (MRK), Eli Lilly (LLY), and Pfizer (PFE) have forward PE multiples of 15.9x, 18.6x, and 13.3x, respectively.
On a capital-structure neutral basis, Johnson & Johnson trades at ~13.2x, which is on par with the industry average. Other competitors such as Merck (MRK), Eli Lilly (LLY), and Pfizer (PFE) have forward EV-to-EBITDA multiples of 11.9x, 13.7x, and 10.8x, respectively.
Johnson & Johnson’s stock value has risen over 10.4% in the last 12 months. Wall Street analysts estimate that the stock price will rise ~4.9% over the next 12 months. Analysts’ recommendations show a 12-month target price of $137.60 per share compared to the price of $131.17 per share on September 25, 2017. Also, out of the 22 analysts tracking Johnson & Johnson, ten analysts recommend a “buy,” nine analysts recommend a “hold,” while three analysts recommend a “sell.” The consensus rating for Johnson & Johnson is 2.6, which is a moderate buy for value investors.