Why Johnson & Johnson (JNJ) is a Top Value Stock for the Long-Term
For new and old investors, taking full advantage of the stock market and investing with confidence are common goals.
Achieving those goals is made easier with the Zacks Style Scores, a unique set of guidelines that rates stocks based on popular investing methodologies, namely value, growth, and momentum. The Style Scores can help you narrow down which stocks are better for your portfolio and which ones can beat the market over the long-term.
Why Investors Should Pay Attention to This Value Stock
Finding good stocks at good prices, and discovering which companies are trading under their true value, are what value investors like to focus on. So, the Value Style Score takes into account ratios like P/E, PEG, Price/Sales, and Price/Cash Flow to highlight 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 is a Zacks Rank #3 (Hold) stock, with a Value Style Score of B and VGM Score of A. Shares are currently trading at a forward P/E of 15.7X for the current fiscal year compared to the Large Cap Pharmaceuticals industry's P/E of 13.9X. Additionally, JNJ has a PEG Ratio of 2.8 and a Price/Cash Flow ratio of 12.9X. Value investors should also note JNJ's Price/Sales ratio of 4.5X.
Value investors don't just pay attention to a company's valuation ratios; positive earnings play a crucial role, too. Five analysts revised their earnings estimate upwards in the last 60 days for fiscal 2023. The Zacks Consensus Estimate has increased $0.22 to $10.49 per share. JNJ has an average earnings surprise of 2.9%.
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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