The global healthcare giant, Johnson & Johnson (NYSE: JNJ) was incorporated in 1887 in the state of New Jersey. The shares of Johnson & Johnson were first listed on the New York Stock Exchange in 1944. Today, the company has a market capitalization of $279.76 billion and is a dominant part of the Dow Jones Industrial Average as well as Standard and Poor's 500 Index. Johnson & Johnson is a ‘dividend aristocrat’ and a sound ‘defensive’ stock.  

Johnson & Johnson and its subsidiaries produce a broad range of products in the health care field. Johnson & Johnson operates across three segments: consumer, pharmaceutical, and medical devices.

The consumer segment includes items marketed to the general public through retailers such as baby care, oral care and skin care products. The company's second segment is the pharmaceutical segment that focuses on five therapeutic areas, including immunology, infectious diseases, neuroscience, oncology, and cardiovascular and metabolic diseases. According to the company’s annual report, its pharmaceutical segment is one of the fastest-growing pharmaceutical businesses in the U.S., Europe, and Japan. Lastly, the company also creates medical device—medical devices are used in professional treatment in hospitals and clinics: orthopedic, surgical care, specialty surgery, cardiovascular care, diagnostics, diabetes care, and vision care. The image below represents the percentage contribution of each segment towards the company’s revenue during fiscal 2014. 

Financials

Johnson & Johnson reported revenue of $74.33 billion for the fiscal year 2014, an increase of 4.24% from the revenue in fiscal 2013. Of the total revenue, the consumer segment contributed $14.5 billion, while the pharmaceutical and medical devices segment reported $32.3 billion and $27.5 billion respectively. The net income witnessed a jump of 18% during fiscal 2014 to reach $16.32 billion from $13.83 billion in the previous fiscal. The company has steadily grown regarding its revenue and net income over the years. The table below reflects the revenue and net income during the past four fiscal years.

($ Billions)

FY14

FY13

FY12

FY11

FY10

Revenue

74.33

71.31

67.22

65.03

61.57

Net Income

16.32

13.83

10.85

9.67

13.33

Source: Company Reports

During the third quarter of the current fiscal 2015, Johnson & Johnson announced sales revenue of $17.1 billion, a decline of 7.4% as compared to the third quarter of the previous fiscal. While it’s operational sales increased by 0.8%, the negative impact of currency was 8.2%. Its international sales decreased by 13.7%, which reflected a negative currency impact of 15.8%, outweighing the operational growth of 2.1%. The company’s net income was reported at $3.35 billion, a decline of 29.3% from the net income of $4.75 billion during the third quarter of 2014. During the first nine months of 2015 (a cumulative of first, second and third quarters), Johnson & Johnson reported revenue of $52.26 billion, a decline of 6.8% compared to the figure of $56.07 billion during the same period in 2014. The net earnings decreased by 11.7% from $13.80 billion during the nine months of 2014 to $12.19 billion in 2015 for the same period. 

Johnson & Johnson has been paying consistently increasing dividends since 1963 and thus is regarded as a ‘dividend king’. According to the Johnson & Johnson’s Investor Page, the company has had “31 consecutive years of adjusted earnings increases and 53 consecutive years of dividend increases." The company further states that "Over the last ten years, Johnson & Johnson stock generated an 8.3% total return for investors compared to a 7.7% total return for the S&P 500.”

Currently, the shares of Johnson & Johnson are down by 6.25% over the last one-year period, and they are down by 3.33% year-to-date in 2015. The company has recently announced a share repurchase program of up to $10 billion with no time specification. 

Source: Johnson & Johnson

The Bottom Line

During 2015, the dollar’s strength has been causing trouble for Johnson & Johnson, which has witnessed declines in its revenue. The company is well diversified within the healthcare industry and geographically; in fact, Johnson & Johnson’s generates more revenue from outside of the U.S. than from domestic markets. Negating the currency headwinds, the company has an impressive line of products across the three business segments which are well poised to generate sound sales and revenue growth for Johnson & Johnson. The company has increased its adjusted earnings guidance for full-year 2015 to $6.15 - $6.20 per share during the announcement of the third quarter results. Overall, Johnson & Johnson is a great stock for the volatile times and a good pick for the long-term, dividend-loving investors. (Related reading, see: 3 Reasons Johnson & Johnson Stock Could Rise.)

Notes: The market capitalization, one-year returns and year-to-date returns are as of November 1, 2015.