1 stock that is always a safe bet in the face of market volatility

Concerns about record inflation, the Federal Reserve’s persistent hawkish stance, geopolitical tensions and a potential recession have fueled increased market volatility this year.

Despite various macro headwinds, diversified healthcare company Johnson & Johnson (JNJ) managed to beat estimates for revenue and net income for the third quarter of fiscal 2022. The company’s adjusted operating sales increased 8.2% year-over-year, while that its net profit rose 21.6% year-over-year.

JNJ’s strong financial performance demonstrates its continued strength and resilience across all of its business segments. “Looking forward, I remain confident in our business and our ability to continue to advance our innovative portfolio and pipeline,” said Joaquin Duato, CEO of JNJ.

This month, JNJ and Abiomed Inc. (AMDD), a global leader in breakthrough heart, lung and kidney assist technologies, has entered into a definitive agreement under which JNJ will acquire all of the outstanding shares of ABMD for an upfront payment of $380 per share in cash. The transaction is expected to strengthen JNJ’s MedTech business.

“The addition of Abiomed provides a strategic platform to advance breakthrough cardiovascular disease treatments and help more patients around the world while creating value for our shareholders,” said Joaquin Duato.

Shares of JNJ have gained 4.4% over the past month and 3.8% over the past year to close the latest trading session at $169.25.

Here is what could influence the performance of JNJ in the short term:

Strong finances

For the third quarter of fiscal 2022 ended September 30, 2022, JNJ’s sales increased 1.9% year-over-year to $23.79 billion, beating consensus estimate of 23.0% by 1.5% .43 billion dollars. The company’s net profit rose 21.6% from the year-ago quarter to $4.46 billion. Its adjusted EPS of $2.55 beat the consensus EPS estimate of $2.49 by 2.6%.

Favorable analyst estimates

Analysts expect JNJ’s EPS for fiscal 2022 and 2023 to rise 2.5% and 3.2% year-over-year to $10.04 and $10.37, respectively. The company’s revenue for fiscal 2022 and 2023 is expected to increase 1.4% and 2.6% year-over-year to $95.04 billion and $97.55 billion, respectively.

Additionally, it has exceeded consensus EPS estimates in each of the past four quarters.

Attractive returns for shareholders

On September 14, JNJ authorized the repurchase of up to $5 billion of its common stock. Joaquin Duato, Chairman and CEO, said: “With our strong cash flow and our lowest level of net debt in five years, we have the capacity to invest in innovation, increase our dividend, make strategic acquisitions and take this action to deliver returns to shareholders. and drive long-term growth.

On October 19, JNJ declared a fourth quarter dividend of $1.13 per share on its common stock, payable to shareholders on December 6, 2022. Its annual dividend of $4.52 earns 2.67% on the current share price of the action. Its average return over four years is 2.60%.

JNJ’s dividend payouts have grown at a CAGR of 5.8% over the past three years and at a CAGR of 6% over the past five years. The company has a record 59 consecutive years of dividend growth.

High profitability

JNJ’s trailing 12-month gross profit margin of 67.52% is 24.3% higher than the industry average of 54.31%. Its trailing 12-month EBITDA margin of 33.37% is 996% above the industry average of 3.04%. Additionally, the stock’s trailing 12-month net income margin of 19.95% compares to the industry average of minus 5.84%.

Additionally, JNJ’s leveraged trailing 12-month FCF margin of 18.66% compares to the industry average of minus 2.35%. Likewise, its ROCE, ROTC and SPIN of 26.45%, 26.45% and 14.81% compare to industry averages of minus 38.67%, 21.39% and 30.70%, respectively.

POWR ratings reflect promising outlook

JNJ’s strong fundamentals are reflected in its POWR Rankings. The stock has an overall rating of A, which equates to a Strong Buy in our proprietary rating system. POWR ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

Our proprietary scoring system also rates each stock against eight distinct categories. JNJ has a stability rating of A, in sync with its two-year beta of 0.40. Additionally, the stock has a B rating for quality, in line with its above-industry profitability measures.

In stock 162 Medical – Pharmaceutical industry, it is ranked #8.

Click here to see additional POWR ratings for JNJ (Growth, Value, Momentum, and Sentiment).

See all major stocks in the medical and pharmaceutical industry here.

Conclusion

JNJ has survived in a dynamic macroeconomic environment, as evidenced by its stable revenues and profit streams. Additionally, the company appears well positioned to deliver transformative healthcare solutions, thanks to strategic acquisitions and its diverse portfolio and pipeline.

The company has also been able to pay growing dividends to its shareholders for 59 consecutive years. Given its strong financials, high profitability and attractive dividends, we believe it could be an ideal investment in the current volatile market conditions.

How does Johnson & Johnson (JNJ) compare to its peers?

Although JNJ has an overall POWR rating of A, one might consider looking at its industry peers, Pfizer Inc. (DFP), Novo Nordisk A/S ADR (NVO) and Bristol-Myers Squibb Co. (BMY), which also have an overall rating of A (Strong Buy).


JNJ shares were trading at $173.07 per share on Monday afternoon, up $3.82 (+2.26%). Year-to-date, JNJ has gained 3.16%, versus a -15.07% rise in the benchmark S&P 500 over the same period.

About the Author: Mangeet Kaur Bouns

Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using its fundamental approach to stock analysis, Mangeet seeks to help retail investors understand the underlying factors before making investment decisions. After…

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