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Johnson & Johnson’s Profit Margins in 3Q17

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Johnson & Johnson’s profit margins

Johnson & Johnson (JNJ) reported 10.3% growth in revenues to ~$19.7 billion during 3Q17, compared to ~$17.8 billion during 3Q16. Despite the increase in revenues, the gross profit margin decreased for 3Q17 due to the increased cost of sales. Its net profit margin decreased due to higher expenses during 3Q17 compared to the profit margins of 3Q16.

The chart above compares the profit margins for Johnson & Johnson since 4Q15.

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Profit margins

Johnson & Johnson’s (JNJ) gross profit margin decreased to 64.9% during 3Q17, a decline of ~4.0% compared to the gross profit margin of 69.2% during 3Q16. The decrease in gross profit margin was due to the increased cost of products sold due to the addition of new products.

Its net profit margin decreased due to increased research and development expenses and increased selling, marketing, and administrative expenses. The company reported other income of $236.0 million during 3Q17 compared to other income of $54.0 million during 3Q16. The net profit margin decreased to 19.2% during 3Q17 compared to 23.9% during 3Q16.

Johnson & Johnson revised its sales guidance for 2017, and its sales are now estimated to be $76.2 billion–$76.5 billion. This estimate includes an operational increase in revenues by 5.5%–6.0% as well as an ~0.5% positive impact of foreign exchange. Its adjusted earnings per share (or EPS) are estimated to be $7.25–$7.30 for 2017.

The PowerShares Dynamic Pharmaceuticals ETF (PJP) holds 4.9% in Johnson & Johnson (JNJ), 4.8% in Gilead Sciences (GILD), 4.8% in Bristol-Myers Squibb (BMY), and 2.7% in Biogen (BIIB).

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