Jnj Assessment
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- Pages: 3
Company Name
ticker
JOHNSON & JOHNSON
JNJ
2/16/2009
all figures in $Mil
Company Assessment: Quantitative Valuation
Criteria over 10yrs
DCF Valuation Discount
> 25% or 50% depending on moat
30%
0
Graham Intrinsic Value Discount
> 66%
54%
0
Margins, Profit and Growth
Criteria over 10yrs
Median Revenue growth
10%
Median Gross Margin Median Operating Margin Median Net Margin Median EPS growth Business and Management Performance
Value
Points
Points
Value
30%
11.3% 71.2%
1 1
15%
25.0%
1
10%
17.6%
1
10%
13.9%
1
Criteria over 10yrs
Points
Value
Cash growth from Operations CROIC is postive and capable of paying off financing
15%
13.4%
0
13%
Median FCF growth positive and consistent Median FCF/Sales
10%
28.4% 14.6%
2 1
Consistent over 10yrs
16.7% N/A
2
Consistent ROE (manually check) Consistent ROA (manually check)
Consistent over 10yrs
N/A
Balance Sheet
7%
Criteria for TTM
Current assets > 1.5 x current liabilities
> 1.5 x current liabilities
Price to Book ratio < 2 Debt to Equity FCF to Debt Capitalization Ratio Intangibles % of assets
1.5
1
N/A
3.84
N/A
< 100%
86.9%
> 10%
27.7%
< 30% < 15% of assets
14% 32.6%
User Points
User Points
N/A N/A Points
Value
User Points
1 1 1 0
User Points N/A
Company Assessment: Qualitative Johnson & Johnson is engaged in the research and development, manufacture and sale of a range of products in the healthcare field. Johnson & Johnson has more than 250 operating companies. The Company operates in three segments: Consumer, Pharmaceutical, and Medical Devices and Diagnostics. Sales of the Company's two largest products, RISPERDAL and REMICADE, accounted for approximately 6% and 5% of Johnson & Johnson�s total revenues, respectively, during the fiscal year ended December 30, 2007 (fiscal 2007). During fiscal 2007, the Company acquired three companies: Conor Medsystems, Inc., which is a cardiovascular device company, with new drug delivery technology; Robert Reid, Inc., which is a Japanese orthopedic product distributor, and Maya�s Mom, Inc., which is a social media company. In October 2008, the Company acquired HealthMedia, Inc. In December 2008, Johnson & Johnson acquired Omrix Biopharmaceuticals, Inc.
Competitive Advantage
Comment
Stable market share?
2
Max Points max 2
Dominant company in industry, segment? Low barriers to entry and exit?
2
max 2 max 2
Experience goods (brand effect, trademarks)
1 2
High switching costs?
0
max 2
Network effect? E.g. eBay
2
max 2
User Points
Max Points
1
max 2
Able to increase prices and retain customers? Compete on price? (1 for no, 0 for yes)
1 1
max 1 max 1
Barriers of entry to the business? Diverse customers? (1 for diverse, 0 for concentrated) Involved in competition? Monopoly, duopoly, crowded Company has a recurring revenue stream? Capital intensive company?
0 1 2
max max max max max
Business Model Growth due to: a) existing product / existing market b) existing product / new market c) new product / existing market d) new product / new market
Comment (yes/no) (yes/no) (yes/no) (yes/no)
a) No b) Yes c) No d) Yes
User Points
1 0
max 2
1 1 2 1 1
Management High insider ownership? Candid management on positives and negatives? Management performance at previous jobs? Compensation levels compared to sales?
Comment
User Points 1 1 1 1
Max Points max 1 max 1 max 1 max 1
Industry Boring industry? (1 for slow, 0 for fast industry) Can company adapt to changing industry environment? Industry leader or lagger? (1 for leader, 0 for lagger)
Comment
User Points
Max Points
1 1 1
max 1 max 1 max 1
Psychological Factors to Consider. Not Weighted.
Comment
Recency bias? Hindsight bias? Framing issues correctly and in different manners? Is there a data framing bias? Am I too overconfident on the situation? Performed probability analysis for -ve factors? Too much loss aversion? Sunk cost mentality? Slow in changing opinion? Psychological denial ? Bias from commitment and consistency tendency? Pavlovian association? Social proof bias? Status quo bias? False consensus bais?
Category
Total Points out of 5
Valuation Margins, Profit and Growth Business and Management Performance
0.0 5.0 2.5 4.0
Balance Sheet Competitive Advantage Business Model
3.8 3.5
Management
5.0
Low Risk 3.0
High Growth Under Valued 3.0
3.0
3.0
3.0
JNJ
Well Managed Good Financial Health Strong Moat 4.3
4.0
Low Risk 5.0 4.0
Strong Moat
3.0
High Growth
2.0 1.0 0.0
Good Financial Health
Under Valued
Well Managed
3.8
ticker
JOHNSON & JOHNSON
JNJ
2/16/2009
all figures in $Mil
Company Assessment: Quantitative Valuation
Criteria over 10yrs
DCF Valuation Discount
> 25% or 50% depending on moat
30%
0
Graham Intrinsic Value Discount
> 66%
54%
0
Margins, Profit and Growth
Criteria over 10yrs
Median Revenue growth
10%
Median Gross Margin Median Operating Margin Median Net Margin Median EPS growth Business and Management Performance
Value
Points
Points
Value
30%
11.3% 71.2%
1 1
15%
25.0%
1
10%
17.6%
1
10%
13.9%
1
Criteria over 10yrs
Points
Value
Cash growth from Operations CROIC is postive and capable of paying off financing
15%
13.4%
0
13%
Median FCF growth positive and consistent Median FCF/Sales
10%
28.4% 14.6%
2 1
Consistent over 10yrs
16.7% N/A
2
Consistent ROE (manually check) Consistent ROA (manually check)
Consistent over 10yrs
N/A
Balance Sheet
7%
Criteria for TTM
Current assets > 1.5 x current liabilities
> 1.5 x current liabilities
Price to Book ratio < 2 Debt to Equity FCF to Debt Capitalization Ratio Intangibles % of assets
1.5
1
N/A
3.84
N/A
< 100%
86.9%
> 10%
27.7%
< 30% < 15% of assets
14% 32.6%
User Points
User Points
N/A N/A Points
Value
User Points
1 1 1 0
User Points N/A
Company Assessment: Qualitative Johnson & Johnson is engaged in the research and development, manufacture and sale of a range of products in the healthcare field. Johnson & Johnson has more than 250 operating companies. The Company operates in three segments: Consumer, Pharmaceutical, and Medical Devices and Diagnostics. Sales of the Company's two largest products, RISPERDAL and REMICADE, accounted for approximately 6% and 5% of Johnson & Johnson�s total revenues, respectively, during the fiscal year ended December 30, 2007 (fiscal 2007). During fiscal 2007, the Company acquired three companies: Conor Medsystems, Inc., which is a cardiovascular device company, with new drug delivery technology; Robert Reid, Inc., which is a Japanese orthopedic product distributor, and Maya�s Mom, Inc., which is a social media company. In October 2008, the Company acquired HealthMedia, Inc. In December 2008, Johnson & Johnson acquired Omrix Biopharmaceuticals, Inc.
Competitive Advantage
Comment
Stable market share?
2
Max Points max 2
Dominant company in industry, segment? Low barriers to entry and exit?
2
max 2 max 2
Experience goods (brand effect, trademarks)
1 2
High switching costs?
0
max 2
Network effect? E.g. eBay
2
max 2
User Points
Max Points
1
max 2
Able to increase prices and retain customers? Compete on price? (1 for no, 0 for yes)
1 1
max 1 max 1
Barriers of entry to the business? Diverse customers? (1 for diverse, 0 for concentrated) Involved in competition? Monopoly, duopoly, crowded Company has a recurring revenue stream? Capital intensive company?
0 1 2
max max max max max
Business Model Growth due to: a) existing product / existing market b) existing product / new market c) new product / existing market d) new product / new market
Comment (yes/no) (yes/no) (yes/no) (yes/no)
a) No b) Yes c) No d) Yes
User Points
1 0
max 2
1 1 2 1 1
Management High insider ownership? Candid management on positives and negatives? Management performance at previous jobs? Compensation levels compared to sales?
Comment
User Points 1 1 1 1
Max Points max 1 max 1 max 1 max 1
Industry Boring industry? (1 for slow, 0 for fast industry) Can company adapt to changing industry environment? Industry leader or lagger? (1 for leader, 0 for lagger)
Comment
User Points
Max Points
1 1 1
max 1 max 1 max 1
Psychological Factors to Consider. Not Weighted.
Comment
Recency bias? Hindsight bias? Framing issues correctly and in different manners? Is there a data framing bias? Am I too overconfident on the situation? Performed probability analysis for -ve factors? Too much loss aversion? Sunk cost mentality? Slow in changing opinion? Psychological denial ? Bias from commitment and consistency tendency? Pavlovian association? Social proof bias? Status quo bias? False consensus bais?
Category
Total Points out of 5
Valuation Margins, Profit and Growth Business and Management Performance
0.0 5.0 2.5 4.0
Balance Sheet Competitive Advantage Business Model
3.8 3.5
Management
5.0
Low Risk 3.0
High Growth Under Valued 3.0
3.0
3.0
3.0
JNJ
Well Managed Good Financial Health Strong Moat 4.3
4.0
Low Risk 5.0 4.0
Strong Moat
3.0
High Growth
2.0 1.0 0.0
Good Financial Health
Under Valued
Well Managed
3.8
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