Intrinsic value of Johnson & Johnson - JNJ

Previous Close

$140.09

  Intrinsic Value

$103.01

stock screener

  Rating & Target

sell

-26%

Previous close

$140.09

 
Intrinsic value

$103.01

 
Up/down potential

-26%

 
Rating

sell

We calculate the intrinsic value of JNJ stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 373.1

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  83,213
  85,127
  87,314
  89,770
  92,492
  95,478
  98,730
  102,250
  106,042
  110,111
  114,465
  119,111
  124,057
  129,314
  134,892
  140,803
  147,061
  153,678
  160,670
  168,052
  175,842
  184,057
  192,716
  201,839
  211,448
  221,565
  232,214
  243,420
  255,209
  267,609
Variable operating expenses, $m
  56,845
  57,972
  59,262
  60,709
  62,313
  64,073
  65,989
  68,063
  70,298
  72,696
  67,455
  70,193
  73,108
  76,206
  79,493
  82,977
  86,665
  90,564
  94,685
  99,035
  103,626
  108,467
  113,570
  118,946
  124,609
  130,571
  136,846
  143,450
  150,397
  157,705
Fixed operating expenses, $m
  6,191
  6,327
  6,467
  6,609
  6,754
  6,903
  7,055
  7,210
  7,369
  7,531
  7,696
  7,866
  8,039
  8,216
  8,396
  8,581
  8,770
  8,963
  9,160
  9,362
  9,567
  9,778
  9,993
  10,213
  10,438
  10,667
  10,902
  11,142
  11,387
  11,637
Total operating expenses, $m
  63,036
  64,299
  65,729
  67,318
  69,067
  70,976
  73,044
  75,273
  77,667
  80,227
  75,151
  78,059
  81,147
  84,422
  87,889
  91,558
  95,435
  99,527
  103,845
  108,397
  113,193
  118,245
  123,563
  129,159
  135,047
  141,238
  147,748
  154,592
  161,784
  169,342
Operating income, $m
  20,177
  20,827
  21,586
  22,452
  23,425
  24,502
  25,686
  26,976
  28,375
  29,884
  39,313
  41,052
  42,910
  44,892
  47,002
  49,245
  51,626
  54,151
  56,825
  59,656
  62,649
  65,812
  69,153
  72,680
  76,402
  80,327
  84,466
  88,828
  93,425
  98,266
EBITDA, $m
  32,138
  32,883
  33,752
  34,741
  35,849
  37,076
  38,422
  39,888
  41,476
  43,189
  45,028
  46,999
  49,104
  51,349
  53,737
  56,276
  58,969
  61,824
  64,848
  68,047
  71,429
  75,002
  78,776
  82,758
  86,959
  91,390
  96,060
  100,982
  106,167
  111,628
Interest expense (income), $m
  730
  1,646
  1,747
  1,865
  2,000
  2,152
  2,320
  2,504
  2,705
  2,922
  3,156
  3,407
  3,675
  3,962
  4,267
  4,592
  4,936
  5,301
  5,687
  6,095
  6,526
  6,982
  7,462
  7,969
  8,504
  9,066
  9,659
  10,284
  10,941
  11,632
  12,359
Earnings before tax, $m
  18,531
  19,079
  19,721
  20,452
  21,273
  22,183
  23,182
  24,272
  25,453
  26,729
  35,906
  37,376
  38,948
  40,625
  42,411
  44,309
  46,326
  48,464
  50,730
  53,129
  55,667
  58,350
  61,184
  64,177
  67,335
  70,668
  74,182
  77,888
  81,793
  85,907
Tax expense, $m
  5,003
  5,151
  5,325
  5,522
  5,744
  5,989
  6,259
  6,553
  6,872
  7,217
  9,695
  10,092
  10,516
  10,969
  11,451
  11,964
  12,508
  13,085
  13,697
  14,345
  15,030
  15,754
  16,520
  17,328
  18,181
  19,080
  20,029
  21,030
  22,084
  23,195
Net income, $m
  13,528
  13,928
  14,396
  14,930
  15,529
  16,193
  16,923
  17,718
  18,581
  19,512
  26,212
  27,285
  28,432
  29,656
  30,960
  32,346
  33,818
  35,379
  37,033
  38,784
  40,637
  42,595
  44,664
  46,849
  49,155
  51,588
  54,153
  56,858
  59,709
  62,712

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  156,121
  159,712
  163,817
  168,425
  173,531
  179,133
  185,234
  191,838
  198,952
  206,588
  214,756
  223,472
  232,752
  242,615
  253,081
  264,172
  275,912
  288,327
  301,445
  315,295
  329,910
  345,323
  361,569
  378,686
  396,714
  415,695
  435,674
  456,698
  478,816
  502,080
Adjusted assets (=assets-cash), $m
  156,121
  159,712
  163,817
  168,425
  173,531
  179,133
  185,234
  191,838
  198,952
  206,588
  214,756
  223,472
  232,752
  242,615
  253,081
  264,172
  275,912
  288,327
  301,445
  315,295
  329,910
  345,323
  361,569
  378,686
  396,714
  415,695
  435,674
  456,698
  478,816
  502,080
Revenue / Adjusted assets
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
Average production assets, $m
  58,998
  60,355
  61,906
  63,647
  65,577
  67,694
  69,999
  72,495
  75,184
  78,069
  81,156
  84,449
  87,956
  91,683
  95,638
  99,830
  104,266
  108,958
  113,915
  119,149
  124,672
  130,496
  136,636
  143,104
  149,917
  157,090
  164,640
  172,585
  180,943
  189,734
Working capital, $m
  -2,164
  -2,213
  -2,270
  -2,334
  -2,405
  -2,482
  -2,567
  -2,658
  -2,757
  -2,863
  -2,976
  -3,097
  -3,225
  -3,362
  -3,507
  -3,661
  -3,824
  -3,996
  -4,177
  -4,369
  -4,572
  -4,785
  -5,011
  -5,248
  -5,498
  -5,761
  -6,038
  -6,329
  -6,635
  -6,958
Total debt, $m
  32,356
  34,543
  37,042
  39,849
  42,958
  46,370
  50,086
  54,107
  58,440
  63,090
  68,064
  73,373
  79,024
  85,031
  91,404
  98,158
  105,308
  112,869
  120,858
  129,293
  138,193
  147,580
  157,473
  167,898
  178,877
  190,436
  202,604
  215,407
  228,877
  243,045
Total liabilities, $m
  95,078
  97,265
  99,764
  102,571
  105,680
  109,092
  112,808
  116,829
  121,162
  125,812
  130,786
  136,095
  141,746
  147,753
  154,126
  160,880
  168,030
  175,591
  183,580
  192,015
  200,915
  210,302
  220,195
  230,620
  241,599
  253,158
  265,326
  278,129
  291,599
  305,767
Total equity, $m
  61,043
  62,447
  64,052
  65,854
  67,851
  70,041
  72,427
  75,009
  77,790
  80,776
  83,970
  87,378
  91,006
  94,862
  98,955
  103,291
  107,881
  112,736
  117,865
  123,280
  128,995
  135,021
  141,373
  148,066
  155,115
  162,537
  170,349
  178,569
  187,217
  196,313
Total liabilities and equity, $m
  156,121
  159,712
  163,816
  168,425
  173,531
  179,133
  185,235
  191,838
  198,952
  206,588
  214,756
  223,473
  232,752
  242,615
  253,081
  264,171
  275,911
  288,327
  301,445
  315,295
  329,910
  345,323
  361,568
  378,686
  396,714
  415,695
  435,675
  456,698
  478,816
  502,080
Debt-to-equity ratio
  0.530
  0.550
  0.580
  0.610
  0.630
  0.660
  0.690
  0.720
  0.750
  0.780
  0.810
  0.840
  0.870
  0.900
  0.920
  0.950
  0.980
  1.000
  1.030
  1.050
  1.070
  1.090
  1.110
  1.130
  1.150
  1.170
  1.190
  1.210
  1.220
  1.240
Adjusted equity ratio
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  13,528
  13,928
  14,396
  14,930
  15,529
  16,193
  16,923
  17,718
  18,581
  19,512
  26,212
  27,285
  28,432
  29,656
  30,960
  32,346
  33,818
  35,379
  37,033
  38,784
  40,637
  42,595
  44,664
  46,849
  49,155
  51,588
  54,153
  56,858
  59,709
  62,712
Depreciation, amort., depletion, $m
  11,961
  12,057
  12,166
  12,289
  12,424
  12,574
  12,736
  12,912
  13,101
  13,304
  5,715
  5,947
  6,194
  6,457
  6,735
  7,030
  7,343
  7,673
  8,022
  8,391
  8,780
  9,190
  9,622
  10,078
  10,558
  11,063
  11,594
  12,154
  12,742
  13,362
Funds from operations, $m
  25,489
  25,985
  26,562
  27,219
  27,954
  28,767
  29,659
  30,630
  31,682
  32,816
  31,927
  33,232
  34,626
  36,113
  37,695
  39,376
  41,161
  43,052
  45,055
  47,175
  49,417
  51,785
  54,287
  56,927
  59,712
  62,650
  65,747
  69,012
  72,451
  76,074
Change in working capital, $m
  -42
  -50
  -57
  -64
  -71
  -78
  -85
  -92
  -99
  -106
  -113
  -121
  -129
  -137
  -145
  -154
  -163
  -172
  -182
  -192
  -203
  -214
  -225
  -237
  -250
  -263
  -277
  -291
  -307
  -322
Cash from operations, $m
  25,531
  26,034
  26,619
  27,282
  28,024
  28,845
  29,743
  30,722
  31,781
  32,922
  32,040
  33,353
  34,755
  36,249
  37,840
  39,530
  41,323
  43,224
  45,237
  47,367
  49,619
  51,999
  54,512
  57,164
  59,962
  62,913
  66,024
  69,303
  72,758
  76,396
Maintenance CAPEX, $m
  -4,072
  -4,155
  -4,250
  -4,360
  -4,482
  -4,618
  -4,767
  -4,930
  -5,105
  -5,295
  -5,498
  -5,715
  -5,947
  -6,194
  -6,457
  -6,735
  -7,030
  -7,343
  -7,673
  -8,022
  -8,391
  -8,780
  -9,190
  -9,622
  -10,078
  -10,558
  -11,063
  -11,594
  -12,154
  -12,742
New CAPEX, $m
  -1,178
  -1,357
  -1,551
  -1,741
  -1,930
  -2,117
  -2,305
  -2,496
  -2,689
  -2,885
  -3,087
  -3,294
  -3,507
  -3,727
  -3,955
  -4,191
  -4,437
  -4,692
  -4,957
  -5,234
  -5,523
  -5,824
  -6,139
  -6,468
  -6,813
  -7,173
  -7,550
  -7,945
  -8,358
  -8,791
Cash from investing activities, $m
  -5,250
  -5,512
  -5,801
  -6,101
  -6,412
  -6,735
  -7,072
  -7,426
  -7,794
  -8,180
  -8,585
  -9,009
  -9,454
  -9,921
  -10,412
  -10,926
  -11,467
  -12,035
  -12,630
  -13,256
  -13,914
  -14,604
  -15,329
  -16,090
  -16,891
  -17,731
  -18,613
  -19,539
  -20,512
  -21,533
Free cash flow, $m
  20,281
  20,523
  20,817
  21,181
  21,613
  22,109
  22,671
  23,296
  23,987
  24,742
  23,455
  24,344
  25,301
  26,328
  27,428
  28,604
  29,856
  31,190
  32,607
  34,111
  35,706
  37,395
  39,182
  41,073
  43,072
  45,183
  47,412
  49,764
  52,245
  54,862
Issuance/(repayment) of debt, $m
  1,876
  2,187
  2,500
  2,806
  3,110
  3,412
  3,715
  4,022
  4,333
  4,650
  4,975
  5,308
  5,652
  6,006
  6,374
  6,754
  7,150
  7,561
  7,989
  8,435
  8,900
  9,386
  9,894
  10,424
  10,979
  11,560
  12,167
  12,803
  13,470
  14,168
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  1,876
  2,187
  2,500
  2,806
  3,110
  3,412
  3,715
  4,022
  4,333
  4,650
  4,975
  5,308
  5,652
  6,006
  6,374
  6,754
  7,150
  7,561
  7,989
  8,435
  8,900
  9,386
  9,894
  10,424
  10,979
  11,560
  12,167
  12,803
  13,470
  14,168
Total cash flow (excl. dividends), $m
  22,157
  22,710
  23,317
  23,988
  24,722
  25,521
  26,386
  27,318
  28,319
  29,392
  28,430
  29,652
  30,952
  32,335
  33,802
  35,358
  37,006
  38,751
  40,596
  42,546
  44,606
  46,781
  49,076
  51,498
  54,051
  56,742
  59,579
  62,567
  65,715
  69,030
Retained Cash Flow (-), $m
  -1,291
  -1,404
  -1,605
  -1,802
  -1,996
  -2,191
  -2,385
  -2,582
  -2,782
  -2,985
  -3,194
  -3,408
  -3,629
  -3,856
  -4,092
  -4,337
  -4,590
  -4,854
  -5,129
  -5,416
  -5,714
  -6,026
  -6,352
  -6,693
  -7,049
  -7,422
  -7,812
  -8,220
  -8,648
  -9,096
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  20,866
  21,306
  21,712
  22,186
  22,726
  23,331
  24,001
  24,736
  25,538
  26,406
  25,236
  26,244
  27,324
  28,478
  29,710
  31,021
  32,416
  33,896
  35,467
  37,130
  38,892
  40,755
  42,724
  44,805
  47,002
  49,321
  51,767
  54,347
  57,067
  59,934
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  20,005
  19,505
  18,895
  18,268
  17,615
  16,932
  16,215
  15,461
  14,670
  13,844
  11,984
  11,199
  10,389
  9,561
  8,722
  7,883
  7,053
  6,242
  5,461
  4,718
  4,023
  3,382
  2,800
  2,282
  1,828
  1,439
  1,111
  841
  623
  451
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Johnson & Johnson is a holding company, which is engaged in the research and development, manufacture and sale of a range of products in the healthcare field. It operates through three segments: Consumer, Pharmaceutical and Medical Devices. Its primary focus is products related to human health and well-being. The Consumer segment includes a range of products used in the baby care, oral care, skin care, over-the-counter pharmaceutical, women's health and wound care markets. The Pharmaceutical segment is focused on five therapeutic areas, including immunology, infectious diseases, neuroscience, oncology, and cardiovascular and metabolic diseases. The Medical Devices segment includes a range of products used in the orthopedic, surgery, cardiovascular, diabetes care and vision care fields. Its research facilities are located in the United States, Belgium, Brazil, Canada, China, France, Germany, India, Israel, Japan, the Netherlands, Singapore, Switzerland and the United Kingdom.

FINANCIAL RATIOS  of  Johnson & Johnson (JNJ)

Valuation Ratios
P/E Ratio 22.9
Price to Sales 5.3
Price to Book 5.4
Price to Tangible Book
Price to Cash Flow 20.2
Price to Free Cash Flow 24.4
Growth Rates
Sales Growth Rate 2.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -6.8%
Cap. Spend. - 3 Yr. Gr. Rate -2.1%
Financial Strength
Quick Ratio 9
Current Ratio 0
LT Debt to Equity 31.9%
Total Debt to Equity 38.5%
Interest Coverage 28
Management Effectiveness
Return On Assets 12.5%
Ret/ On Assets - 3 Yr. Avg. 12.4%
Return On Total Capital 17.5%
Ret/ On T. Cap. - 3 Yr. Avg. 17.6%
Return On Equity 23.4%
Return On Equity - 3 Yr. Avg. 22.6%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 69.9%
Gross Margin - 3 Yr. Avg. 69.6%
EBITDA Margin 33.8%
EBITDA Margin - 3 Yr. Avg. 33.7%
Operating Margin 27.5%
Oper. Margin - 3 Yr. Avg. 27.5%
Pre-Tax Margin 27.5%
Pre-Tax Margin - 3 Yr. Avg. 27.5%
Net Profit Margin 23%
Net Profit Margin - 3 Yr. Avg. 22.3%
Effective Tax Rate 16.5%
Eff/ Tax Rate - 3 Yr. Avg. 18.9%
Payout Ratio 52.1%

JNJ stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the JNJ stock intrinsic value calculation we used $81581 million for the last fiscal year's total revenue generated by Johnson & Johnson. The default revenue input number comes from 0001 income statement of Johnson & Johnson. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our JNJ stock valuation model: a) initial revenue growth rate of 2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for JNJ is calculated based on our internal credit rating of Johnson & Johnson, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Johnson & Johnson.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of JNJ stock the variable cost ratio is equal to 68.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $6058 million in the base year in the intrinsic value calculation for JNJ stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for Johnson & Johnson.

Corporate tax rate of 27% is the nominal tax rate for Johnson & Johnson. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the JNJ stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for JNJ are equal to 70.9%.

Life of production assets of 14.2 years is the average useful life of capital assets used in Johnson & Johnson operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for JNJ is equal to -2.6%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $59752 million for Johnson & Johnson - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 2663.154 million for Johnson & Johnson is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Johnson & Johnson at the current share price and the inputted number of shares is $373.1 billion.

RELATED COMPANIES Price Int.Val. Rating
AZN Astrazeneca PL 39.67 24.54  sell
IART Integra LifeSc 50.88 25.16  str.sell
MRK Merck & Compan 82.78 44.01  sell
CNMD CONMED Corpora 82.42 59.66  sell
DXCM DexCom, Inc. 148.04 5.21  str.sell

CONTACT US      

About X-FIN       Privacy policy       Terms of use      

Copyright © X-FIN.com 2005-2019. All rigths reserved.