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how to read vl investment survey page

By Joyce Reed,2014-07-08 16:17
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how to read vl investment survey page

Sample Value Line Stock Page

2 3456 7 89 10

1

160

    120

    100

    80

    64

    48

    32

    24

    20

    16

    12

    Percent 9

    shares 6

    traded 3

    Target Price Range 2006 2007 2008

    JOHNSON & JOHNSON NYSE-JNJ 51.82 20.8 23.0

    23.0 1.46 1.7%

    TIMELINESS 2 Raised 10/11/02 SAFETY 1 New 7/27/90 TECHNICAL 2 Raised 2/28/03 BETA .75 (1.00 = Market) 2006-08 PROJECTIONS Ann??l Total

    Price Gain Return

    High 80 (+55%) 13% Low 65 (+25%) 8%

    Insider Decisions

    A MJJ A S O N D

    to Buy 000100000

    Options 100510010

    to Sell 200000000

    Institutional Decisions 1Q2002 2Q2002 3Q2002 to Buy 544 506 600 to Sell 706 789 679 Hld??s(000)189187018374791813102

High: 14.7 12.6 14.1 23.1 27.0 33.7 44.9 53.4 53.0 61.0 65.9 57.6

    Low: 10.8 8.9 9.0 13.4 20.8 24.3 31.7 38.5 33.1 40.3 41.4 49.1

    % TOT. RETURN 1/03

    THIS VL ARITH.

    STOCK INDEX

    1 yr. -5.5 -18.4

    3 yr. 30.8 0.1

    5 yr. 72.9 13.9

    CAPITAL STRUCTURE as of 9/30/02 Total Debt $4483 mill. Due in 5 Yrs $1149 mill. LT Debt $2102 mill. LT Interest $145 mill. (9% of Cap??l)

    Leases, Uncapitalized Annual rentals $117.0 mill.

    Pension Liability None

    Pfd Stock None

    Common Stock 2,970,581,455 shs. as of 10/25/02 (91% of Cap??l)

    MARKET CAP: $153.9 billion (Large Cap) CURRENT POSITION 2000 2001 9/30/02($MILL.) Cash Assets 5744 7972 7245

    Receivables 4464 4630 5395

    Inventory (FIFO) 2842 2992 3255 Other 2400 2879 3106

    Current Assets 15450 18473 19001 Accts Payable 2083 2838 2503

    Debt Due 1479 793 2381

    Other 3578 4413 5817

    Current Liab. 7140 8044 10701

    ANNUAL RATES Past Past Est??d ??99-??01 of change (per sh) 10 Yrs. 5 Yrs. to ??06-??08 Sales 9.5% 7.5% 9.0%

    ????Cash Flow???? 13.0% 12.5% 11.5% Earnings 13.5% 13.0% 12.0%

    Dividends 14.0% 14.0% 10.0%

    Book Value 14.0% 15.0% 16.0%

    Fiscal

    Year

    Ends

    Full

    Fiscal

    Year

    QUARTERLY SALES ($ mill.) A

    Mar.Per Jun.Per Sep.Per Dec.Per 2000 7319 7508 7204 7108 29139

2001 8021 8342 8238 8403 33004

    2002 8743 9073 9079 9403 36298

    2003 9600 9800 10100 10400 39900

    2004 10600 10900 11000 11800 44300

    Fiscal

    Year

    Ends

    Full

    Fiscal

    Year

    EARNINGS PER SHARE AB

    Mar.Per Jun.Per Sep.Per Dec.Per

    2000 .47 .47 .45 .31 1.70

    2001 .50 .51 .50 .40 1.91

    2002 .59 .60 .60 .46 2.23

    2003 .67 .69 .67 .57 2.60

    2004 .77 .79 .77 .67 3.00

    Cal-Full

    endar Year

    QUARTERLY DIVIDENDS PAID C?ö

    Mar.31 Jun.30 Sep.30 Dec.31

    1999 .125 .14 .14 .14 .55

    2000 .14 .16 .16 .16 .62

    2001 .16 .18 .18 .18 .70

    2002 .18 .205 .205 .205 .80

    2003

    1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2.91 3.38 3.66 4.22 4.67 5.25 5.50 6.12 7.27 8.11 8.41 8.80 9.88 10.47 .43 .51 .56 .65 .73 .85 .93 1.06 1.26 1.46 1.62 1.83 2.03 2.27 .30 .36 .41 .48 .55 .62 .69 .78 .93 1.09 1.21 1.34 1.49 1.70 .10 .12 .14 .16 .19 .22 .25 .28 .32 .37 .43 .49 .55 .62 .19 .25 .28 .31 .37 .42 .38 .36 .48 .52 .52 .54 .62 .59 1.27 1.31 1.56 1.84 2.11 1.97 2.17 2.77 3.49 4.07 4.59 5.06 5.83 6.76 2753.5 2664.6 2664.4 2664.6 2665.3 2621.6 2571.9 2572.0 2590.7 2665.0 2690.3 2688.1 2779.4 2781.9

    17.9 14.2 15.4 16.5 20.5 20.0 15.4 14.8 18.5 22.4 24.9 28.1 31.6 26.4 1.20 1.18 1.17 1.23 1.31 1.21 .91 .97 1.24 1.40 1.44 1.46 1.80 1.72 1.9% 2.4% 2.2% 2.1% 1.7% 1.8% 2.4% 2.4% 1.9% 1.5% 1.4% 1.3% 1.2% 1.4% 14138 15734 18842 21620 22629 23657 27471 29139

    21.3% 22.4% 23.2% 24.6% 25.1% 26.6% 27.0% 27.4%

    617.0 724.0 857.0 1009.0 1067.0 1246.0 1444.0 1515.0 1787.0 2006.0 2403.0 2887.0 3303.0 3677.6 4209.0 4800.0 23.4% 25.2% 27.6% 28.4% 27.8% 27.1% 27.5% 27.5%

    12.6% 12.7% 12.8% 13.4% 14.6% 15.5% 15.3% 16.5%

    2005.0 2414.0 3550.0 4186.0 5280.0 2970.0 5746.0 8310.0 1493.0 2199.0 2107.0 1410.0 1126.0 1269.0 2450.0 2037.0 5568.0 7122.0 9045.0 10836 12359 13590 16213 18808 26.1% 22.3% 22.3% 24.2% 24.9% 25.2% 22.9% 23.3% 32.1% 28.2% 26.6% 26.6% 26.7% 27.1% 26.0% 25.5% 20.3% 18.0% 17.4% 17.7% 17.5% 17.5% 16.8% 16.4% 37% 36% 34% 34% 34% 35% 35% 36%

    2001 2002 2003 2004 . VALUE LINE PUB., INC. 06-08 10.83 12.20 13.45 14.90 Sales per sh A 18.75 2.46 2.85 3.30 3.75 ????Cash Flow???? per sh 4.80 1.91 2.23 2.60 3.00 Earnings per sh B 3.70 .70 .80 .87 .93 Div??ds Decl??d per sh ?öC 1.21 .57 .60 .60 .65 Cap??l Spending per sh .85 7.95 8.10 9.90 12.00 Book Value per sh D 19.15 3047.2 2970.0 2970.0 2970.0 Common Shs Outst??g E 2970.0 27.2 25.9 Bold figures are

    Value Line

    estimates

    Avg Ann??l P/E Ratio 20.0

    1.39 1.38 Relative P/E Ratio 1.35

    1.3% 1.4% Avg Ann??l Div??d Yield 1.6%

    33004 36298 39900 44300 Sales ($mill) A 55700 28.8% 30.5% 32.5% 33.0% Operating Margin 33.0% 1605.0 1700 1925 2150 Depreciation ($mill) 3000 5885.0 6786.0 7850 9000 Net Profit ($mill) 11250 28.2% 28.4% 28.5% 28.5% Income Tax Rate 28.5% 17.8% 18.7% 19.7% 20.3% Net Profit Margin 20.2% 10429 10300 11700 13400 Working Cap??l ($mill) 18800 2217.0 2100 2100 2400 Long-Term Debt ($mill) 4700 24233 24000 29300 35600 Shr. Equity ($mill) 56900 22.5% 26.0% 25.0% 24.0% Return on Total Cap??l 18.5% 24.3% 28.0% 27.0% 25.5% Return on Shr. Equity 20.0% 15.8% 18.5% 18.0% 17.5% Retained to Com Eq 13.5% 35% 35% 33% 31% All Div??ds to Net Prof 32% Company??s Financial Strength A++

    Stock??s Price Stability 95

    Price Growth Persistence 100

    Earnings Predictability 100

    (A) Year ends on last Sunday of December. (B) Primary egs. through ??96, diluted thereafter. Excl. nonrecur. charges: ??90, 5?é; ??92, 23?é; ??98, 22?é; ??99, 2?é; ??01, (7?é); ??02, (7?é). Incl. nonrecur. charge: ??86, 28?é. May not sum to total due to rounding. Next egs. report due late April.

(C) Next div??d meeting early April. Goes ex

    mid-May. Div??d payment dates: about the 15th

    of Mar., June, Sept., Dec. ?öDiv??d reinvestment

    plan available. (D) Incl. intang. in ??01: $9.1 bill., $2.91/sh. (E) In mill., adj. for stock splits.

    BUSINESS: Johnson & Johnson manufactures and sells health care products. Major lines by segment: Consumer (baby care, non- prescription drugs, sanitary protection, and skin care), Professional (wound closures, minimally invasive surgical instruments, diag- nostics, orthopedics, and contact lenses), and Pharmaceutical (con- traceptives, and psychiatric, anti-infective, and dermatological drugs). Important brands: Band-Aid, Monistat, Neutrogena, Reach, Stayfree, and Tylenol. Int??l business, 38% of ??02 sales. ??01 deprec. rate: 12.9%; R&D, 10.9% of sales. Has 101,800 empl.; 164,200 stockholders. Off./Dir. own 0.2% (3/02 Proxy). Chrmn. & CEO: Wil- liam Weldon. Inc.: NJ. Addr.: One Johnson & Johnson Plaza, New Brunswick, NJ 08933. Tel.: 732-524-0400. Internet: www.jnj.com. Johnson & Johnson is in talks to ac-

    quire the biotechnology firm Scios for

    $2.4 billion. The cash-for-stock exchange,

    pending government antitrust clearance

    and Scios shareholder approval, will likely

    close during the June quarter. (J&J will

    pay $45 for each Scios share.) Scios sells

    Natrecor, a drug for congestive heart fail-

    ure. About five million Americans suffer

    from heart failure each year, which results

    in a million hospital admissions. Natrecor

    sales totaled roughly $100 million last

    year. Leveraging its sales and marketing

    expertise and applying novel technology to

    improve the drug??s delivery, J&J should be

    able to accelerate Natrecor??s revenue

    growth rate to a yearly sales average of

    $600 million. We expect the deal to dilute

    our 2003 and 2004 share net by about

    $0.10, and the company to recognize an in-

    process R&D charge of $700 million. (In

    line with Value Line tradition, the impact

    of the acquisition is excluded from our

    presentation until consumated.)

    The deal is a risky one. We think J&J??s

    primary interest in Scios is for its pipeline

    of inflammatory disease products, specifi-

cally, the potential blockbuster SCIO-469,

    an oral pill in Phase II studies for

    rheumatoid arthritis. Current competitors

    on the market, such as Amgen??s Enbrel

    and J&J??s own Remicade, are injectible.

    Although SCIO-469??s more convenient

    dosing would help it gain a significant

    share of the multibillion dollar market,

    $2.4 billion is an expensive bet on a com-

    pound in the very early stages of develop-

    ment.

    The company??s drug-eluting stent may

    soon receive FDA approval. Sales of

    Cypher, which should be cleared for the

    domestic market by April, may well reach

    several hundred million dollars this year.

    We have concerns about this timely

    stock??s growth potential out to

    2006?C2008. Competition facing J&J??s

    pharmaceutical division, which accounts

    for 45% of revenues, is a formidable threat

    to the company??s earnings growth rate.

    Nancy Chow March 7, 2003

    Sales (and Operating Margins) by Business Line

    2000 2001 2002 2003

    Consumer 6904(12.6%) 6962(14.5%) 6564(20.0%) 6600(20.0%) Professional 10281(16.5%) 11191(17.9%) 12583(20.5%) 14100(20.5%) Pharmaceutical 11954(36.8%) 14851(41.2%) 17151(37.0%) 19200(37.0%) Company Total 29139(23.9%) 33004(24.0%) 36298(27.5%) 39900(27.5%) LEGENDS

    15.0 x ?åCash Flow?åpsh .... Relative Price Strength 2-for-1 split 6/922-for-1 split 6/96

    2-for-1 split 6/01

    Options: YesShaded area indicates recession

    . 2003, Value Line Publishing, Inc. All rights reserved. Factual material is obtained from sources believed to be reliable and is provided without warranties of any kind.

    THE PUBLISHER IS NOT RESPONSIBLE FOR ANY ERRORS OR OMISSIONS HEREIN. This publication is strictly for subscriber??s own, non-commercial, internal use. No part

    of it may be reproduced, resold, stored or transmitted in any printed, electronic or other form, or used for generating or marketing any printed or electronic publication, service or product.

    To subscribe call 1-800-833-0046.

    RECENT PRICE

    P/ERATIO RELATIVE P/E RATIO

    DIV??D YLD( )Trailing:

    Median: VALUE

    LINE

    24

    29

    28

    27

    25

    23

    22

    21

    20 19

    18

    17

    16

    15

    14

    12

    11

    13

    26

1.

    Value Line??s Ranks?ªthe rank for Timeliness; the rank for Safety; the Technical rank. Beta, the stock??s sensitivity to fluctuations of the market as a whole, is included in this box but is not a rank. (See Glossary for Industry rank.)

    2.

    The Legends box contains the ??cash flow?? multiple, the amounts and dates of recent stock splits and an indication if options on the stock are traded. 3.

    Monthly price ranges of the stock?ªplotted on a ratio (logarithmic) grid to show percentage changes in true proportion. For example, a ratio chart equalizes the move of a $10 stock that rises to $11 with that of a $100 stock that rises to $110. Both have advanced 10% and over the same space on a ratio grid. 4.

    The ??cash flow?? line?ªreported earnings plus depreciation (??cash flow??) multiplied by a number selected to correlate the stock??s 3- to 5-year projected target price, with ??cash flow?? projected out to 2004. 5.

    Recent price?ªsee page 2 of the Summary & Index for the date, just under ??Index to Stocks.??

    6.

    P/E ratio?ªthe recent price divided by the latest six months?? earnings per share plus earnings estimated for the next six months.

    7.

    Trailing and median P/E?ªthe first is the recent price divided by the sum of reported earnings for the past 4 quarters; the second is an average of the price/ earnings ratios over the past 10 years.

    8.

    Relative P/E ratio?ªthe stock??s current P/E divided by the median P/E for all stocks under Value Line review.

    9.

    The stock??s highest and lowest price of the year. 10. Dividend yield?ªcash dividends estimated to be declared in the next 12 months divided by the recent price.

    11. Target Price Range?ªthe range in which a stock

    price is likely to trade in the years 2006-08. Also shown in the "Projections?? box on the left. 12. Relative Price Strength

    describes the stock??s past

    price performance relative to the Value Line Arithmetic Composite Average of approximately 1,700

    stocks. (A rising line indicates the stock price has been rising more than the Value Line universe.) 13. The % Total Return shows the price appreciation and dividends of a stock and the Value Line Arithmetic Composite Index for the past 1, 3, and 5 years. 14. The percent of shares traded monthly?ªthe number of shares traded each month as a % of the total outstanding.

    15. Statistical Array?ªValue Line estimates appearing in the area on the right side are in bold italics. 16. Business Data?ªa brief description of the company??s business and major products along, with other important data.

    17. Analyst??s Commentary?ªan approximately 350word report on recent developments and prospects?ª issued every three months on a preset schedule. 18. The expected date of receipt by subscribers. The Survey is mailed on a schedule that aims for delivery to every subscriber on Friday afternoon.

    19. Value Line??s Indexes of Financial Strength, Stock??s Price Stability, Price Growth Persistence, and Earnings Predictability. (See Glossary for definitions.) 20. Footnotes explain a number of things, such as the way earnings are reported, whether basic or diluted. 21. Quarterly dividends paid are actual payments. The total of dividends paid in four quarters may not equal the figure shown in the annual series on dividends declared in the Statistical Array. (Sometimes a dividend declared at the end of the year will be paid in the first quarter of the following year.)

    22. Quarterly sales are shown on a gross basis. Quarterly earnings on a per-share basis (estimates in bold type). 23. Annual rates of change (on a compound per-share basis). Actual for each of the past 5 and 10 years, estimated for the next 3 to 5 years.

    24. Current position?ªtotal current assets and total current liabilities, and their detail.

    25. The capital structure as of the indicated recent date

    showing, among other things, the $ amount and % of capital in long-term debt and preferred stock. We also show the number of times that interest charges were earned.

    26. Statistical Array?ªhistorical financial data appears in regular type.

    27. Stock purchases/sales by institutions?ªthe number of times institutions with more than $100 million of assets under management bought or sold stock during the past three quarters and the total number of shares held by those institutions at the end of each quarter.

    28. The record of insider decisions?ªthe number of times officers and directors bought or sold stock or exercised options during the past nine months. 29. The projected stock price in 2006-08. Also, the total expected % gain/loss before dividends and the Annual Total Return (% including dividends).

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