Johnson & Johnson (NYSE: JNJ) released their financial report for the second quarter of 2022, this week, demonstrating strong growth and promising guidance for the rest of the year. Analysts seem to agree, as the consensus rating for JNJ is MODERATE BUY. This rating has remained consistent for at least the past three months.
These same analysts have given JNJ an average price target of $191.50 within the range of $201 and $174. All of these estimates are up, at least 2 percent.
Earnings Per Share Regularly Beats Estimates
In their most recent earnings report, Johnson & Johnson reported an Earnings Per Share (EPS) of $2.55 on sales of $23.7 billion. Their next reporting date is October 18. EPS has exceeded analysis expectations, for the most part, across the previous four quarters. For example, Q3 2021 EPS range was $2.23 to $2.52 with a consensus estimate of $2.35. The actual EPS of 2.60 beat the estimate by 9.24 percent. Earnings per share in Q4 also came in near the top of the $2.01 to $2.15 range, at $2.13.
For Q1 of 2022, the EPS range was $2.16 to $2.77, with an analyst estimate of $2.59. The reported EPS o f $2.67 exceeding the consensus by more than 5.5 percent. Things settled a little more in the second quarter with reported earnings of $2.59 only slightly better than the consensus estimate of $2.54, which settled easily into the estimated range of $2.41 to $2.70.
Quarterly Growth Drags but Annual Growth Compensates
While the EPS trend for JNJ stock appears to be positive, it turns out quarterly earnings growth is down -1.67 percent. In terms of sales numbers, the trend has been much of the same cycle. Even overall annual growth mimics EPS with annual sales growth slipping by -1.21 percent as well.
Annual earnings growth, on the other hand,t is where we can see JNJ moving in the right direction. Consensus sales estimates for 2018 was $8.16 in a range of $8.14 to $8.18 Actual reported earnings almost beat the range, coming in at $8.18.
2019 earnings was much of the same. This year had an earnings range of $6.62 to $8.75 with a consensus estimate of $8.67. Reported earnings of 2019 beat the estimate, at $8.68.
The following year, 2020, was nearly identical to 2019 but JNJ stumbled a bit in 2021. In 2021, analysts forecast an annual average earnings range of $9.69 to $10.41 with a consensus estimate of $9.83. This would be first time in the past year reported earnings did not meet the estimate; in this case, reported to be 9.80.
In 2021, full-year sales grew by more than 13.5 percent, year-over-year, to $97.78 billion. Much of this momentum comes from medical device sales, which occupied most of their sales metrics. These numbers increased by nearly 18 percent, to $27.1 billion, compard to the year before.
Much like the way JNJ's annual quarterly sales growth mirrors earrnings growth, quarterly and annual sales also parallel each other. Indeed, while both quarterly sales and earnings had by about the same amount, it seems annual earnings growth and annual sales growth are both up around 3 percent; at 3.45 percent and 2.16 percent, respectively.
About Johnson & Johnson
The origin of Johnson & Johnson dates back to 1886 and, sure enough, the name refers to the brothers who founded the company. At the time, pharmacist Robert Wood Johnson joined with his brothers Edward Mead Johnson and James Wood Johnson to launch a firm that would focus on research recently completed by Joseph Lister. Lister's research shed light on the nature of airborne germs and, especially, infectious disease.
Their new company would aim to develop emerging sterilization techniques and hygeinic surgical dressings. With this aim, they hoped to create a more effective method of post-operative sterilization; one even more effective than Lister's approach of spraying carbolic acid into operating rooms. Within a year, the brothers incorporated the company under the name Johnson & Johnson.
While they are certainly more prominently known, today, as a personal care and pharmaceuticals company, their first product was actually a book. “Modern Methods of Antiseptic Wound Treatment” was the first mainstream publication focused on treating injuries. Their second product was the very first pre-made first-aid kit.
By 1894, Johnson & Johnson had branched into maternity and other baby-oriented products, which includes their iconic baby powder. After establishing its foothold in consumer goods, Johnson & Johnson eventually released the first prescription contraceptive in America—Ortho-Gynol—in 1931.
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