Just like investors, well diversified companies like General Electric
While Johnson & Johnson's anemia drug and drug eluting stent haven't been performing up to par, the rest of its franchise has been making up the difference and then some. Fortunately for Johnson & Johnson, it's also in an industry where consumers aren't likely to cut back, and that bodes well for its upcoming earnings release after the sun rises tomorrow.
What analysts say:
- Buy, sell, or waffle? With a strong 2:1 favor -- 12 buys and 6 holds -- analysts think Johnson & Johnson is a steal at these levels.
- Revenue. Analysts are looking for $15.7 billion in revenue this quarter, up just 5%, but in this market, any growth is good growth.
- Earnings. The bottom line is expected to expand a lot faster, with 25% year-over-year growth expected to result in $1.12 per share this quarter.
What management says:
Management's goal is to return value to shareholders in the form of dividends and share repurchases. So far so good with an ever increasing dividend resulting in a yield of over 3% and stock repurchase of $6.6 billion since August of last year. The stock was mostly up in the last quarter, so hopefully management didn't spend much of the $3.4 billion it has left in authorized repurchases, instead buying them in the last week or two at fire sale prices.
What management does:
Margins are holding pretty steady, and while we'd like to see them improving, it takes a lot to move a tank with the inertia that Johnson & Johnson has in it.
The one concern is falling free cash flow relative to revenue. While free cash flow can change quarter to quarter for a variety of reasons, we'd like to see that number getting pushed back up. Cash is king after all.
4/1/2007 |
7/1/2007 |
9/30/2007 |
12/30/2007 |
3/30/2008 |
6/29/2008 |
|
---|---|---|---|---|---|---|
Gross |
71.4% |
71.3% |
71.1% |
70.9% |
71.1% |
71.1% |
Operating |
25.6% |
25.6% |
25.5% |
24.9% |
25.3% |
25.4% |
Net |
18.6% |
18.5% |
17.6% |
17.3% |
18.6% |
18.6% |
FCF/Revenue |
21.6% |
21.8% |
21.2% |
20.1% |
18.8% |
18.1% |
Source: Capital IQ, a division of Standard & Poor's. Data is for the four quarters ending on the indicated dates.
Double digit growth (or pretty close to it) -- quarter after quarter, year after year -- what more could an investor ask for in the revenue department?
Growth (YOY) |
4/1/2007 |
7/1/2007 |
9/30/2007 |
12/30/2007 |
3/30/2008 |
6/29/2008 |
---|---|---|---|---|---|---|
Revenue |
9.3% |
11.4% |
12.6% |
14.6% |
12.4% |
11.3% |
All data courtesy of Capital IQ, a division of Standard & Poor's. Data is for the four quarters ending on the indicated dates.
One Fool says:
The biggest questions for Johnson & Johnson this quarter are how much more market share will the company's drug-eluting stent lose now that it's got competition from both Medtronic
While I expect there will be substantial damage done, especially to its drug-eluting stent, Johnson & Johnson still has a lot of things going for it. Its consumer healthcare division has been on fire since picking up Pfizer's