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Johnson & Johnson (JNJ) Operating Income And Margin History

Annual Operating Income

Quarterly Operating Income

Note: For Johnson & Johnson, 2021 refers to year ending Jan 2, 2021 | LTM = Last 12 months

Notable Facts

🢒 The figure for JNJ changed significantly in 2019 compared to the other years 🢒 3.8% of S&P 500 companies have higher Operating Income than JNJ

Revenue Trends That Inspire Investment Action

Revenue growth evaluation is just as critical as operating income

Johnson & Johnson Operating Income Comparisons

JNJ Operating Income vs. Operating Margin

🢒 JNJ operating margin has increased from 0.7% to 13.5% in the last 6 years

🢒 Operating margin is defined as operating income as % of revenue

🢒 A high or increasing operating margin is desirable

JNJ Revenue

JNJ Operating Income

JNJ Operating Margin

LTM = Last 12 months | JNJ Revenue Comparison

Whether a company has high or low operating margin, can be assessed by comparing it with peers

Operating Margin vs. Peers, Industry & Sector

🢒 Based on LTM operating margin, JNJ is behind most peers considered. In addition, it is ahead of the sector but behind the industry

Operating Margin vs Peers

JNJ peers include MRK, ABBV, PFE, BMY

TickerLTM20212020201920182017 MRK28.9%25.7%12.0%18.7%19.6%15.0%ABBV26.6%31.9%24.8%39.0%19.5%33.8%PFE26.1%23.9%19.5%36.2%13.9%26.1%JNJ13.5%24.9%23.6%24.1%2.2%0.7%BMY13.4%15.5%-21.0%21.8%21.7%15.5%

🢒 The years above represent latest 5 fiscal years for respective companies

🢒 MRK (2021 🢒 Dec 31 2021) | ABBV (2021 🢒 Dec 31 2021) | PFE (2021 🢒 Dec 31 2021) | JNJ (2021 🢒 Jan 2 2021) | BMY (2021 🢒 Dec 31 2021)

Operating Margin vs Industry & Sector

JNJ belongs to Pharmaceuticals industry and Health Care sector

TickerLTM20212020201920182017 Industry20.7%22.6%14.6%23.7%12.5%8.4%JNJ13.5%24.9%23.6%24.1%2.2%0.7%Sector12.0%11.7%9.2%11.4%8.4%9.4%

Operating margin is just one of the parameters. Compare JNJ fully with its peers on Johnson & Johnson Peer Comparison

Operating Margin vs. Categories of Stocks

🢒 Category Peers = Companies with similar financial characteristics

Operating Margin

Ticker20212020201920182017Highly Profitable Stocks27.5%23.8%23.9%22.1%22.7%JNJ24.9%23.6%24.1%2.2%0.7%Large Cap Stocks18.4%13.6%14.7%14.2%14.4%High Dividend Yield Stocks17.2%11.4%15.6%14.9%14.7%Fairly Valued Stocks15.1%10.4%11.9%11.3%11.5%Slow Growing Stocks13.8%8.7%12.3%12.3%11.8%

Note: Below are specifics on characteristics of each category peer of JNJ

Slow Growing: 3-Year Average Annual Revenue Growth < 5%Highly Profitable: 3 Year Average EBIT Margin > 10%Large Cap: Large Cap (>$10 Bil)High Dividend Yield: Stocks With Dividend Yield > 2%Fairly Valued: P/EBIT 10-20

Johnson & Johnson Operating Income vs Expected Return

P/EBIT Valuation Multiple & Operating Income Growth Used For Estimating Johnson & Johnson Valuation

🢒 Trefis valuation per share of $195 based on forward P/EBIT of 21 and expected operating income growth of 2.9% for next FY

🢒 $195 valuation per share vs $178 market price implies expected return of 9.6% - a small return

A Good Alternative Is To Invest In Trefis Multi-Strategy Portfolio

201720182019202020212022Total [1]AvgBestReturns JNJ Return21%-8%13%8%9%4%55% S&P 500 Return19%-6%29%16%27%-13%86% Trefis MS Portfolio Return23%-2%34%68%46%-17%227% <---Monthly Win Rates [2] JNJ Win Rate58%50%75%50%58%50% 57% S&P 500 Win Rate92%67%83%58%75%50% 71%<---Trefis Portfolio Win Rate78%58%75%58%83%33% 64% Max Drawdowns [3] JNJ Max Drawdown-3%-15%-3%-24%-3%-8% -9%<---S&P 500 Max Drawdown-3%-20%-7%-34%-5%-19% -15% Trefis Portfolio Max Drawdown-4%-24%-11%-38%-14%-16% -18% [1] Cumulative total returns since 2017[2] Win Rate = % of calendar months in which monthly returns were positive[3] Max drawdown represents maximum peak-to-trough decline within a year

Additionally, These Investment Themes Can Give Similar Market & Capitalization Exposure As Johnson & Johnson

=> Covid-19 Testing Stocks => Gene Editing Stocks => Covid-19 Vaccines Stocks => Covid-19 Treatment Stocks => Out Of Favor Health Care Stocks => Mega Cap Stocks

P/EBIT Valuation Multiple vs. Peers

P/EBIT (Price To Operating Income Ratio)

TickerCurrent20212020201920182017 JNJ29.528.383.1109.7376.11829.2BMY20.2-16.238.819.825.734.7ABBV15.215.531.143.488.4110.6MRK14.731.429.919.626.446.9PFE12.519.478.216.017.515.4

Note: The years above represent calendar year endJNJ Valuation Ratios Comparison

FAQ

[1] What Is JNJ Operating Income

Operating income refers to accounting profit realized after deduction of operating expenses such as raw material, R&D, marketing, sales, admin

🢒 Operating income is a reliable measure of profits because it represents income from core operations

🢒 Operating income can be used to calculate P/EBIT, which is a measure of market valuation per dollar of operating profit

[1] What's The Unique Content Here?

Beyond the annual and quarterly operating income and margin data, we offer the ability to compare these metrics for Johnson & Johnson with those of its direct peers, industry, sector, and category peers. The idea is to give complete information on how to analyze and use operating income metric in investment decisions

[2] What Are Direct And Category Peers?

Direct Peers include select companies that fully or partially compete in the same markets as Johnson & Johnson. These include Merck, Bristol Myers Squibb, Roche, Pfizer, AbbVie.

Category Peers are companies which exhibit similarity vs Johnson & Johnson when it comes to specific financial characteristics. For example, if Johnson & Johnson is growing fast (defined as average annual growth > 15%), then one of its category peers will be companies that lie in the same growth band

[3] Why Do You Compare With Category Peers?

Comparison with category peers offers additional insights to aid investment decisions. The financial characteristics used to categorize these peers are also some of the commonly used filters that investors use

[4] What's The Purpose Of P/EBIT Comparison In Context Of Operating Income?

Higher or improving operating margin, and resultant superior operating profit growth usually command higher market valuationThis market valuation metric is called Price-To-Operating Income ratio or P/EBIT, where EBIT is adjusted to remove one time line itemsComparing P/EBIT among peers along side operating margin and its trend, can yield potential mispricing opportunitiesFor example, if Apple Is trading cheaper than its peers but its operating margin and trend are superior, then there is a chance that the market will correct this mispricing and Apple's stock will gain relatively more

[5] I Can Not Find All Peers Of JNJ Here To Compare, What Should I Do?

We currently do not offer the ability to compare operating income and margin of specific tickers on demand. However, you can find similar operating income comparison page for the desired tickers by:

Open All Companies Page --> Choose Specific Ticker To Open Specific Company Page --> Navigate To 'Financials' section

Johnson & Johnson Insights

Johnson & Johnson better betsJohnson & Johnson counter-intuitive comparisonJohnson & Johnson peer comparisonComplete analyses on Johnson & Johnson (JNJ) stockLatest analyses on all stocks

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