Wednesday, March 2, 2011

Johnson and Johnson 2

This company (NYSE-JNJ) has reported for the financial year ending in 2010. I follow a couple of US companies although I am not invested in US stocks. We are always told we should invest outside our market, so I want to see how I would have done if I had invested in some the big, recommended US dividend paying stock.

When I look at insider trading, I find there was a lot more insider selling than insider buying. Most of the selling was in the later part of 2010. A positive is that the company raised the dividend by 10.2% in 2010. This increase is in line with the 5 year average increase of 10.6%.

This company has a 5 year median low Price/Earnings Ratio of 12.1 and a 5 year median high P/E Ratio of 15.7. The current P/E Ratio of 12.6 is toward the low end for this ratio. I get a Graham Price of $47.36 for 2011. The current stock price of $61.01 is almost 30% above the Graham Price. However, the 10 year low average difference between the Graham Price and stock price is 74%. So, on a relative basis, the stock price is low.

The 10 year average Price/Book Value Ratio for this stock is 5.06. The current Ratio at 2.96 is only 60% of the 10 year average. In this case, the stock price is relatively low again. The current yield is 3.5% and the 5 year average is 2.9%. On this basis also, the stock is relatively low. The yield of 3.5% is a good yield.

When I look at analysts recommendations, I find Strong Buy, Buy and Hold recommendations. There are an awful lot of Hold recommendations, but the Strong Buy recommendations move the consensus to a Buy recommendation. (See my site for information on analyst ratings.)

Some analysts see 2011 as a recovery year for Johnson and Johnson and so are recommending it as a Buy. Those recommending this stock as a Buy see the 12 month stock price reaching $73 and those recommending a Hold see the 12 month stock price reaching only $65. I have also noted that some Canadians are saying now is the time to buy US stocks because our currency is high. Most of the reason we have not made much in US stocks lately has to do with the rising Canadian dollar.

Story in Forbes says that Johnson & Johnson Shares Fall after Posting Nearly Flat Q4 Results for 2010.

Johnson & Johnson is engaged in the manufacture and sale of a broad range of products in the health care field in many countries of the world. The company's worldwide business is divided into three segments: Consumer; Pharmaceutical; and Professional. Its web site is here JNJ. See my spreadsheet at jnj.htm.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.

1 comment:

  1. I got a bunch of shares for my RRSP when the price was under $60.

    I love JNJ, it should be around for forever, with divi increases as well! :)