Valuation analysis for Johnson & Johnson (NYSE:JNJ)

The Earnings improvement being witnessed by Johnson & Johnson (NYSE:JNJ) shareholders is welcome, because the Y/Y growth rates have been barely positive in recent quarters, but the growth rate versus the multiple still puts valuation into question.  The PE multiple looks way too high given the meager growth rate.

This observation however must be accompanied by a realization that shareholders of JNJ consider the company best of breed, a bellwether, and deserved of their confidence and investment dollars even through times in which the company faces difficulties.

Arguably, confidence like this is completely warranted and reasonable when market conditions themselves are healthy.  Investors can often accurately presume that temporary blips will b overcome and good companies will promptly right themselves in good economic conditions and positive market environments, but that all changes when mare environments pose more risk like they do today.

In fact, it is our opinion that even with the now better but still meager EPS growth rates that investors in JNJ eventually feel enough market related pressure to influence selling in this otherwise trusted name too.  Even good companies fall when markets fall, and the ones that are overvalued often fall harder.

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Technical Summary

Term →Near Mid Long
Bias Strong Strong Neutral
P1 103.84 95.84 94.02
P2 105.59 102.01 101.80
P3 106.85 107.68 108.56

Long Term Trading Plans for JNJ

February 28, 2016, 05:20 pm ET

The technical Summary and associated Trading Plans for JNJ listed below will help you make important timing decisions for your trades. This data is based on our proprietary analysis for JNJ. In addition we offer Market Timing Models and Stock Filters in the links above which may increase the proficiency of the decisions you make.

JNJ - (Long) Support Plan

Buy over 101.80 target 108.56 stop loss @ 101.54.
The technical summary data tells us to buy JNJ near 101.80 with an upside target of 108.56. This data also tells us to set a stop loss @ 101.54 to protect against excessive loss in case the stock begins to move against the trade. 101.80 is the first level of support below 105.78 , and by rule, any test of support is a buy signal. In this case, support 101.80 is being tested, a buy signal would exist.

JNJ - (Short) Resistance Plan

Short under 108.56 target 101.80 stop loss @ 108.82
The technical summary data is suggesting a short of JNJ as it gets near 108.56 with a downside target of 101.80. We should have a stop loss in place at 108.82 though. 108.56 is the first level of resistance above 105.78, and by rule, any test of resistance is a short signal. In this case, if resistance 108.56 is being tested, a short signal would exist.

JNJ Long Term Analysis

JNJ EPS Analysis

JNJ Dividend Chart

JNJ Revenue chart

JNJ Growth rate - Quarterly

JNJ Growth rate - Yearly

JNJ PE chart

JNJ PEG chart