Johnson & Johnson (JNJ) was a stock I was reluctant to back in the past few years. The valuation didn’t quite seem to fit for me and that kept me away but recently, I’ve had a change of heart. I’ve found the value in the shares given that the business is nearly constantly improving and a big piece of that is because of margins. In this article – using data from Seeking Alpha – I’ll attempt to quantify JNJ’s advantage in the recent past as well as any further gains that may accrue, which is critical to the bull case.
We’ll begin with a look at JNJ’s pretax income margin for the past five years as well as the first half of this year to get an idea of where it’s come from.