Triple Rated Companies: What Makes Them Thick (Part 3 of 5)

Johnson and Johnson

For well over a century, Johnson and Johnson (JNJ) has held its reputation as one of the world’s largest and most diversified companies specializing in healthcare products.

JNJ is renowned for its extensive range of products, including Band-Aid bandages, Tylenol pain medications, Vaccines, and Neutrogena skin and body care items. Not only does JNJ boast a significant market capitalization and rank 36th on the 2021 Fortune 500 list of the largest corporations in the United States in terms of total revenue, it also enjoys a prestigious AAA credit rating.

The company’s rating is a testament to its robust brand portfolio, diverse product offerings, global presence, and pricing power, all of which contribute to a consistently strong cash flow and favorable leverage profile. JNJ has weathered substantial macroeconomic shocks due to the inelastic demand for healthcare, supported by its diversified business segments that mitigate risk exposure.

Analyzing JNJ‘s price movements over the past five years, from 2017 to 2022, reveals a persistent bullish trend, with a remarkable growth of 46% that has endured despite temporary slowdowns. Even during the Ukraine-Russian crisis, which caused disruptions in the supply chain across multiple industries, the company managed to maintain a steady revenue growth trajectory.

A comprehensive competitive analysis of Johnson & Johnson’s primary segments highlights the medical devices sector as its most significant contributor, with an annual growth rate of over 18%. This is followed by pharmaceutical products, which experienced a surge of 14%, and healthcare products, which saw a growth of 4%.

Furthermore, the company’s track record of financial performance over the past seven years demonstrates a consistent and impressive growth trend in total revenue. Taking a broader view of the competitive landscape among major healthcare players of comparable size, analysts have determined that JNJ holds the highest market capitalization in the entire healthcare industry within the United States, outshining its counterparts.

(Please Note that the credit rating view expressed in this write-up was only adapted and not that of DataPro).


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