Johnson & Johnson
Johnson & Johnson Quality Analysis
Johnson & Johnson (JNJ) is a good quality business scoring 71/100, with particular strength in competitive moat and capital allocation. The business has solid fundamentals but falls short of elite quality on some measures.
Does Johnson & Johnson have a strong competitive moat?
Johnson & Johnson shows a solid competitive position with solid gross margins of 67.6%. However, some vulnerability to competitive pressure suggests the moat, while present, may face challenges. The business earns above-average returns but lacks the exceptional durability of the strongest moats.
Does Johnson & Johnson have pricing power in its industry?
Johnson & Johnson has limited pricing power. The company operates with margins that are average for its industry, and revenue growth has come with some margin pressure. This suggests the business competes partially on price rather than on differentiated value.
How predictable is Johnson & Johnson's business?
Johnson & Johnson offers good predictability. Revenue and cash flows have followed a generally consistent pattern over recent years. Though it experienced a 6.5% revenue dip at one point, the overall trajectory remains positive. The business model produces reasonably forecastable results.
Is Johnson & Johnson financially strong?
Johnson & Johnson has a moderate financial position. Leverage is elevated but not critical. The balance sheet could face stress in an economic downturn. Management should prioritize debt reduction to strengthen the company's resilience.
How effective is Johnson & Johnson's capital allocation strategy?
Johnson & Johnson demonstrates excellent capital allocation, generating excellent returns on invested capital while reducing shares outstanding through buybacks. Management deploys capital at rates well above the cost of capital, creating significant value for shareholders.
The allocation between reinvestment, buybacks, and dividends appears disciplined and shareholder-friendly.
Does Johnson & Johnson have high-quality management?
Johnson & Johnson's management team demonstrates strong execution, with stock-based compensation kept to just 1.3% of revenue. Consistent high returns on capital and stable operating margins indicate a team focused on operational excellence and long-term value creation rather than short-term metrics.
Is Johnson & Johnson a quality company?
Johnson & Johnson is a good quality company with a quality score of 71/100
Predicted probability of operating margin improvement over the next 12 months
- Capital allocation is the strongest dimension at 90/100.
- Average gross margin of 67.6% over 5 years.
- Positive free cash flow in 6 of the last 6 years.
- Debt-to-equity ratio of 0.58x.
What is the fair value of Johnson & Johnson stock?
Is Johnson & Johnson a good investment at $244?
The following analysis is provided for informational and educational purposes only. It does not constitute financial advice, investment advice, or a recommendation to buy or sell any security. The opinions expressed are based on publicly available information and historical data. Beanvest and its contributors may hold positions in the securities mentioned. Investors should conduct their own due diligence or consult a licensed financial advisor before making any investment decision.