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Analyzing the Financials of Mead Johnson, a Heavy Hitter in Pediatric Nutrition

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About Mead Johnson Nutrition

Mead Johnson Nutrition Company (MJN) is a global leader in pediatric nutrition. The company has a portfolio of 70 products in more than 50 countries. Mead Johnson Nutrition’s Enfamil was the top-selling infant formula brand in the US in 2014. It also retained its top rank in Canada for second consecutive year.

Mead Johnson Nutrition was founded in 1905 and is headquartered in Glenview, US. The company has a presence in Asia, Latin America, North America, and Europe. In fiscal 2014, MJN generated 76% of its revenue from outside the US. The company went public in 2009.

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Financial performance

For fiscal 2014, which for the company ended December 31, 2014, Mead Johnson had net sales and EBITDA (earnings before interest, tax, depreciation, and amortization) margin of $4.4 billion and 24.5%, respectively.

Over the past five years, Mead Johnson has achieved a CAGR (compound annual growth rate) of 9.3% in sales and 7.9% in EBITDA. The growth was driven by emerging markets, mainly from China. Improved living standards, health awareness, and demand for high-quality imported products in China resulted in high growth rate at Mead Johnson.

Gauging Mead Johnson Nutrition’s stock

As of December 31, 2015, Mead Johnson’s stock had a market cap of $15.7 billion with a stock price of $79.33. It is a component of the S&P 500 Index (SPY). It is also a part of the Consumer Staples Select Sector SPDR ETF (XLP). MJN has a weight of 0.09% in SPY and 0.93% in XLP. Food and beverage companies make up 18.6% of the total portfolio holdings of XLP.

In this series, we’ll analyze the company’s business fundamentals and investment valuation, comparing the company’s performance to other giants in the industry like Abbott Laboratories (ABT), Danone, Kraft Heinz Company (KHC), and Nestlé SA (NSRGY). But first, let’s take a look at baby food in the broader packaged food industry.

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