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In today's fast-paced and highly competitive business world, it is crucial for investors and industry followers to conduct comprehensive company evaluations. In this article, we will delve into an extensive industry comparison, evaluating Johnson & Johnson (NYSE:JNJ) in relation to its major competitors in the Pharmaceuticals industry. By closely examining key financial metrics, market standing, and growth prospects, our objective is to provide valuable insights and highlight company's performance in the industry.
Johnson & Johnson is the world's largest and most diverse healthcare firm. It has two divisions: pharmaceutical and medical devices. These now represent all of the company's sales following the divestment of the consumer business, Kenvue, in 2023. The drug division focuses on the following therapeutic areas: immunology, oncology, neurology, pulmonary, cardiology, and metabolic diseases. Geographically, just over half of total revenue is generated in the United States.
| Company | P/E | P/B | P/S | ROE | EBITDA (in billions) | Gross Profit (in billions) | Revenue Growth |
|---|---|---|---|---|---|---|---|
| Johnson & Johnson | 21.63 | 5 | 4.28 | 4.69% | $5.68 | $14.87 | 2.34% |
| Eli Lilly and Co | 129.37 | 65.16 | 22.09 | 19.02% | $3.12 | $7.09 | 25.98% |
| Merck & Co Inc | 143.87 | 8.12 | 5.37 | 12.22% | $6.96 | $12.23 | 8.89% |
| AstraZeneca PLC | 39.30 | 6.59 | 5.22 | 5.69% | $4.47 | $10.46 | 16.55% |
| Novartis AG | 24.03 | 5.44 | 4.60 | 6.23% | $4.66 | $9.02 | 9.71% |
| GSK PLC | 14.60 | 4.68 | 2.13 | 7.69% | $2.07 | $5.39 | 5.93% |
| Zoetis Inc | 32.86 | 15.39 | 9 | 11.91% | $0.93 | $1.55 | 9.5% |
| Takeda Pharmaceutical Co Ltd | 45.07 | 0.89 | 1.52 | -0.04% | $186.41 | $668.37 | -5.43% |
| Dr Reddy's Laboratories Ltd | 17.97 | 3.56 | 3.58 | 4.77% | $20.32 | $41.48 | 12.49% |
| Jazz Pharmaceuticals PLC | 23.38 | 1.93 | 2.03 | -0.39% | $0.23 | $0.81 | 1.03% |
| Prestige Consumer Healthcare Inc | 15.41 | 1.94 | 2.86 | 3.04% | $0.09 | $0.15 | -3.11% |
| Corcept Therapeutics Inc | 27.59 | 5.51 | 6.11 | 5.22% | $0.03 | $0.14 | 38.95% |
| Average | 46.68 | 10.84 | 5.86 | 6.85% | $20.84 | $68.79 | 10.95% |
After examining Johnson & Johnson, the following trends can be inferred:
A Price to Earnings ratio of 21.63 significantly below the industry average by 0.46x suggests undervaluation. This can make the stock appealing for those seeking growth.
Considering a Price to Book ratio of 5.0, which is well below the industry average by 0.46x, the stock may be undervalued based on its book value compared to its peers.
The Price to Sales ratio is 4.28, which is 0.73x the industry average. This suggests a possible undervaluation based on sales performance.
The Return on Equity (ROE) of 4.69% is 2.16% below the industry average, suggesting potential inefficiency in utilizing equity to generate profits.
With lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $5.68 Billion, which is 0.27x below the industry average, the company may face lower profitability or financial challenges.
The gross profit of $14.87 Billion is 0.22x below that of its industry, suggesting potential lower revenue after accounting for production costs.
With a revenue growth of 2.34%, which is much lower than the industry average of 10.95%, the company is experiencing a notable slowdown in sales expansion.
The debt-to-equity (D/E) ratio indicates the proportion of debt and equity used by a company to finance its assets and operations.
Considering the debt-to-equity ratio in industry comparisons allows for a concise evaluation of a company's financial health and risk profile, aiding in informed decision-making.
In terms of the Debt-to-Equity ratio, Johnson & Johnson stands in comparison with its top 4 peers, leading to the following comparisons:
In terms of the debt-to-equity ratio, Johnson & Johnson has a lower level of debt compared to its top 4 peers, indicating a stronger financial position.
This implies that the company relies less on debt financing and has a more favorable balance between debt and equity with a lower debt-to-equity ratio of 0.48.
For Johnson & Johnson in the Pharmaceuticals industry, the PE, PB, and PS ratios are all low compared to peers, indicating potential undervaluation. However, the low ROE, EBITDA, gross profit, and revenue growth suggest underperformance relative to industry standards. This may signal a need for further investigation into operational efficiency and growth strategies to align with industry peers.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
Posted In: JNJ
