Johnson & Johnson (JNJ)

Discount cash flow analysis

Sell Overvalued by 37.0%

5% margin of safety What's this?

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How does this work?

This is an interactive analyst report for Johnson & Johnson, based on a discounted cash flow valuation approach.

You can modify the assumptions and the valuation will be updated automatically. You can also save and share your valuation.

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Values in $ millions
2008 2009 2010 2011 2012 2013 2014 2015
 
                 
               
 

What will the revenues be in the future?

Growth beyond year three is driven by the terminal growth rate.

Price history

Sensitivity matrix

   
-1%
Discount Rate %
0%

1%
  -1% $75.16 $73.41 $71.75
Terminal Growth% 0 $76.17 $74.37 $72.66
  +1% $77.20 $75.35 $73.59

How does a change in discount rate or terminal growth affect valuation?

This table shows the sensitivity of the valuation to two key variables - the discount rate and the terminal growth rate

Valuations and comments

  • Valuecruncher created a new valuation of $110.00 (overvalued by 6.74%) - 1 year ago
  • 38fr17h9 created a new valuation of $65.85 (overvalued by 0.36%) - over 6 years ago
  • 38fr17h9 created a new valuation of $65.85 (overvalued by 0.36%) - over 6 years ago
  • 38fr17h9 created a new valuation of $81.57 (undervalued by 23.42%) - over 6 years ago
  • 38fr17h9 created a new valuation of $26.21 (overvalued by 60.34%) - over 6 years ago
  • Wyomingkid1 created a new valuation of $104.42 (undervalued by 80.0%) - 7 years ago
  • Wyomingkid1 created a new valuation of $106.05 (undervalued by 82.81%) - 7 years ago
  • Wyomingkid1 created a new valuation of $137.31 (undervalued by 136.7%) - 7 years ago
  • Wyomingkid1 created a new valuation of $3.58 (overvalued by 93.83%) - 7 years ago
  • sailor100 created a new valuation of $82.04 (undervalued by 39.22%) - almost 8 years ago
  • sailor100 created a new valuation of $74.37 (undervalued by 26.2%) - almost 8 years ago
  • sailor100 created a new valuation of $191.39 (undervalued by 224.78%) - almost 8 years ago
  • sailor100 created a new valuation of $84.77 (undervalued by 43.85%) - almost 8 years ago
  • sailor100 created a new valuation of $45.46 (overvalued by 22.86%) - almost 8 years ago
  • richday101 created a new valuation of $56.96 (overvalued by 5.93%) - 8 years ago
  • fproudho created a new valuation of $56.78 (overvalued by 6.26%) - 8 years ago
  • oyuna created a new valuation of $56.04 (overvalued by 1.82%) - over 8 years ago
  • swampler created a new valuation of $55.83 (undervalued by 8.6%) - over 8 years ago
  • swampler created a new valuation of $64.94 (undervalued by 24.53%) - over 8 years ago
  • SethWellbourne created a new valuation of $37.53 (overvalued by 29.2%) - over 8 years ago
  • GordonGekko created a new valuation of $63.89 (undervalued by 10.75%) - over 8 years ago
  • dweis created a new valuation of $59.13 (overvalued by 2.89%) - almost 9 years ago
  • ffarin created a new valuation of $77.24 (undervalued by 20.05%) - over 9 years ago

Comments

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The boring details

All amounts in millions Figures
Enterprise Value: 325,486
Net Debt (Long-term borrowings less cash): -957
Equity Value: 144,332
Number of Shares Outstanding: 2,767,000,000
Calculated value per share: $74.37

Enterprise Value is the present value of the post-tax cash flows for a business into the future.


Calcuation of EV

Where:

  • C1, C2, C3 - the cash flow in period 1, 2, 3, ...
  • r - the discount rate

To capture the cash flows into the future a terminal value is calculated via a perpetuity calculation -
based on the final years forecast post-tax free cash flow.


Perpetuity

Where:

  • Cn - the cash flow in the final forecast period.
  • LTG - the long-term growth rate
  • r - the discount rate
  • g - the terminal growth rate

The Capital Asset Pricing Model (CAPM) is used to determine the equity component in the discount rate.


CAPM model

Where:

  • rt - the risk free rate
  • t - the tax rate
  • B - the beta of the company
  • MRP - the Market Risk Premium

Valuecruncher uses an estimate of Weighted Average Cost of Capital (WACC) to determine the discount rate in the calculation.