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A Look at Mead Johnson Nutrition’s 4Q16 Performance

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Price movement

Mead Johnson Nutrition Company (MJN) fell 4.8% to close at $71.24 per share during the fourth week of January 2017. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were -4.8%, -0.88%, and 0.68%, respectively, on January 27, 2017.

MJN is trading 1.5% below its 20-day moving average, 0.95% below its 50-day moving average, and 10.9% below its 200-day moving average.

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Related ETF and peers

The Guggenheim S&P Equal Weight Consumer Staples ETF (RHS) invests 2.9% of its holdings in Mead Johnson Nutrition. The YTD price movement of RHS was 1.1% on January 27.

The market caps of MJN’s competitors are as follows:

  • WhiteWave Foods (WWAV) — $9.8 billion
  • Post Holdings (POST) — $5.4 billion
  • Dean Foods (DF) — $1.8 billion

Performance of Mead Johnson in 4Q16

Mead Johnson Nutrition reported 4Q16 net sales of $901.6 million, a fall of 6.8% compared to its net sales of $967.0 million in 4Q15. Sales from Asia, Latin America, and North America and Europe fell 6.6%, 8.0%, and 6.3%, respectively, in 4Q16 compared to 4Q15. The company’s gross profit margin and EBIT (earnings before interest and tax) margin expanded 90 basis points and 480 basis points, respectively, in 4Q16 compared to 4Q15.

Its net income and EPS (earnings per share) rose to $167.8 million and $0.91, respectively, in 4Q16, compared to $128.0 million and $0.67, respectively, in 4Q15. It reported adjusted EPS of $0.78 in 4Q16 and 4Q15.

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2016 results

In 2016, MJN reported net sales of $3.7 billion, a fall of 8.1% YoY (year-over-year). The company’s gross margin and EBIT margin narrowed 10 basis points and 110 basis points, respectively, in 2016.

Its net income and EPS (earnings per share) fell to $544.9 million and $2.92, respectively, in 2016, compared to $653.5 million and $3.27, respectively, in 2015. It reported adjusted EPS of $3.40 in 2016, a fall of 1.2% YoY.

MJN’s cash and cash equivalents rose 5.5%, and its inventories fell 2.4% in 2016. Its current ratio rose to 2.2x in 2016, compared to 2.1x in 2015.

Projections

Mead Johnson has made the following projections for 2017:

  • net sales in the range of -3%–0% on a reported basis and -1%–2% on a constant dollar basis
  • GAAP (generally accepted accounting principles) EPS in the range of $3.05–$3.20
  • non-GAAP EPS in the range of $3.35–$3.50

Next, we’ll look at Spectrum Brands (SPB).

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