Why Johnson & Johnson Stock Is Boosting the Dow

Something that sets us Foolish investors apart is that we like to be in control of our own finances. There's nothing wrong with investing in an index fund, but we like to decide which companies will guide us to a financially healthy retirement.

One very popular stock for many a retirement portfolio --including "The World's Greatest" -- reported this morning, and investors are pleased with what they see. Read below to see why this stock -- Johnson & Johnson (NYSE: JNJ  )  -- is up today, and at the end, I'll offer up access to a special premium report on the company.

Just the numbers

 

Actual

Vs. Expectations

Vs. Q1 2012

Revenue

$17.5 billion

Beat by $100 million

+8.5%

Earnings Per Share

$1.44

Beat by $0.04

+5.1%

Sources: E*Trade, SEC filings. These results actually exclude a $600 million, one-time charge for litigation expenses and the company's acquisition of Synthes.  

Because Johnson & Johnson is such a massive medical conglomerate, it helps to break down the company into its three segments:

  1. Consumer: Sells over the counter (OTC) medicines and products, accounting for 21% of all sales.
  2. Pharmaceuticals: Develops prescription medications, accounting for 39% of all sales.
  3. Medical devices and diagnostics: Offers larger, more complicated machines to medical establishments, accounting for 40% of all sales.

Source: SEC filings. 

Source: SEC filings.

Source: SEC filings.

While it might seem that the slow growth in the consumer sector would be disappointing, it actually was encouraging. The last three years have seen sales of Tylenol and Motrin fall as the company addressed production problems at its Puerto Rico and Pennsylvania plants.  

Pharmaceuticals, on the other hand, were both higher than expected and showed tremendous growth. Sales of Invega (a drug for schizophrenia), Stelara (a psoriasis treatment), Simponi (an arthritis medicine), Remicade (an anti-inflammatory), and Prezista (an HIV treatment) all were major contributors to this growth. 

And even though sales for medical devices were softer than expected, they still showed solid 10% growth. That was helped primarily by the acquisition of Synthes, as well as sales of electrophysiology and cardiovascular products, and the company's 1-Day Acuvue disposable contact lenses.

Is J&J still a buy after today's run?
Involved in everything from baby powder to biotech, Johnson & Johnson's critics are convinced that the company is spread way too thin. If you want to know if J&J is nothing but a bloated corporate whale -- or a well-diversified giant that's perfect for your portfolio -- check out The Fool's new premium report outlining the Johnson & Johnson story in terms that any investor can understand. Claim your copy by clicking here now


Read/Post Comments (0) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

DocumentId: 2366189, ~/Articles/ArticleHandler.aspx, 4/18/2014 4:41:01 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement