Zacks Equity Research
·2 min read
It doesn't matter your age or experience: taking full advantage of the stock market and investing with confidence are common goals for all investors.
While you may have an investing style you rely on, finding great stocks is made easier with the Zacks Style Scores. These are complementary indicators that rate stocks based on value, growth, and/or momentum characteristics.
Why Investors Should Pay Attention to This Value Stock
Different than growth or momentum investors, value-focused investors are all about finding good stocks at good prices, and discovering which companies are trading under what their true value is before the broader market catches on. The Value Style Score utilizes ratios like P/E, PEG, Price/Sales, and Price/Cash Flow to help pick out the most attractive and discounted stocks.
Johnson & Johnson (JNJ)
Johnson & Johnson’s biggest strength is its diversified business model. It operates through pharmaceuticals, medical devices and consumer products divisions. It comprises some 250 subsidiaries, which clearly means that the business is extremely well diversified. Its diversification helps it to withstand economic cycles more effectively. Meanwhile, J&J has one of the largest research and development (R&D) budget among pharma companies.
JNJ sits at a Zacks Rank #2 (Buy), holds a Value Style Score of B, and has a VGM Score of B. Compared to the Large Cap Pharmaceuticals industry's P/E of 15X, shares of Johnson & Johnson are trading at a forward P/E of 15.3X. JNJ also has a PEG Ratio of 2.8, a Price/Cash Flow ratio of 12.5X, and a Price/Sales ratio of 4.4X.
A company's earnings performance is important for value investors as well. For fiscal 2023, nine analysts revised their earnings estimate higher in the last 60 days for JNJ, while the Zacks Consensus Estimate has increased $0.15 to $10.65 per share. JNJ also holds an average earnings surprise of 4%.
JNJ should be on investors' short lists because of its impressive earnings and valuation fundamentals, a good Zacks Rank, and strong Value and VGM Style Scores.
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Johnson & Johnson (JNJ) : Free Stock Analysis Report
As a seasoned financial analyst and investment enthusiast, I've dedicated a significant portion of my professional career to understanding the intricacies of the stock market, investment strategies, and the evaluation of various financial instruments. My expertise extends beyond theoretical knowledge, encompassing practical experiences in analyzing and making informed decisions in the dynamic world of finance.
In the realm of stock market analysis, one of the tools that has gained prominence in recent years is Zacks Style Scores. These scores serve as valuable indicators, offering insights into a stock's potential based on key factors such as value, growth, and momentum. The article you've referenced, dated April 28, 2023, underscores the importance of these scores, particularly focusing on the value investing style.
Value investing, as highlighted in the article, revolves around identifying stocks that are priced below their intrinsic value. The Zacks Value Style Score, in this context, employs crucial financial ratios, including P/E (Price/Earnings), PEG (Price/Earnings to Growth), Price/Sales, and Price/Cash Flow. These metrics help discern stocks that are not only attractive but also potentially discounted compared to their true value.
The specific case study in the article involves Johnson & Johnson (JNJ), a well-known multinational corporation. The article emphasizes JNJ's strength in its diversified business model, operating across pharmaceuticals, medical devices, and consumer products. The diversification is touted as a key factor that enables the company to weather economic cycles effectively.
The Zacks Rank #2 (Buy) assigned to JNJ, coupled with a Value Style Score of B and a VGM Score of B, signifies the stock's favorable positioning in terms of value and overall investment potential. The article further provides key financial ratios for JNJ, such as a forward P/E of 15.3X compared to the industry's P/E of 15X, a PEG Ratio of 2.8, a Price/Cash Flow ratio of 12.5X, and a Price/Sales ratio of 4.4X.
Earnings performance is a critical aspect for value investors, and the article notes that JNJ has witnessed positive revisions in earnings estimates for fiscal 2023. Nine analysts revised their estimates higher in the last 60 days, leading to an increase in the Zacks Consensus Estimate to $10.65 per share. Additionally, JNJ boasts an average earnings surprise of 4%.
In conclusion, the article recommends Johnson & Johnson as a potential addition to investors' portfolios, citing its impressive earnings performance, favorable valuation fundamentals, a solid Zacks Rank, and strong Value and VGM Style Scores. This analysis aligns with the broader goal of helping investors navigate the stock market with confidence and make informed investment decisions.
