Johnson & Johnson (NYSE:JNJ)

Market (fair) value of Johnson & Johnson

The market value demonstrated a generally downward trend over the observed five-year span. Starting at US$456,070 million in 2020, it experienced a slight increase in 2021 to US$457,788 million, representing a minor peak in this period. However, this was followed by a steady decline through 2022 and 2023, reaching a low of US$405,457 million. By the end of 2024, there was a modest recovery to US$414,015 million, although this value remains below the initial 2020 figure. This indicates a fluctuation with an overall decrease in market value over the medium term.

Invested capital

Invested capital showed some variability during the period examined. Beginning at US$98,344 million in 2020, it experienced a slight decrease in 2021 to US$98,066 million. Subsequently, it rose sharply in 2022 to US$113,818 million, representing the highest level recorded in the timeframe. This peak was not sustained, as the value dropped again in 2023 to US$99,118 million. In 2024, invested capital increased to US$106,513 million, indicating some recovery but not reaching the 2022 high. The volatility reflects variable capital investment activities over the years.

Market value added (MVA)

Market value added, which measures the difference between market value and invested capital, followed a downward trajectory throughout the period. Starting at US$357,726 million in 2020, it increased slightly to US$359,722 million in 2021, aligning with the modest rise in market value. Following that, it declined consistently each subsequent year, recording US$328,251 million in 2022, US$306,339 million in 2023, and finally US$307,502 million in 2024. This decline in MVA suggests a decreasing premium of market value over the invested capital base, potentially indicating growing investor caution or diminishing returns on invested capital.

The financial data presents trends over a five-year period from the end of 2020 to the end of 2024. Several key metrics are highlighted, offering insight into the company's financial performance and value creation.

Market Value Added (MVA)

The MVA shows a declining trend overall. It begins at approximately 357.7 billion US dollars in 2020, slightly increasing in 2021 to about 359.7 billion, but then declines consistently in the following years to 328.3 billion in 2022 and further down to 306.3 billion in 2023. By the end of 2024, the MVA stabilizes somewhat at 307.5 billion. This pattern suggests a reduction in the market's perception of the company's value creation potential after peak levels in 2021.

Invested Capital

Invested capital shows more variability without a clear upward or downward trend. Starting at approximately 98.3 billion USD in 2020, it remains almost flat in 2021. However, it increases significantly to 113.8 billion in 2022 before declining again to 99.1 billion in 2023. In 2024, invested capital rises again to about 106.5 billion. This fluctuation indicates changes in the company's asset base or capital investments over time.

MVA Spread Ratio

The MVA spread ratio, which reflects the efficiency in creating value over invested capital, follows a decreasing trajectory from 363.75% in 2020 and 366.82% in 2021 down to a notable drop to 288.4% in 2022. It shows a partial recovery to 309.06% in 2023 but declines again to 288.7% in 2024. This diminished ratio suggests that despite large invested capital, the company’s value creation efficiency has weakened compared to earlier years.

In summary, although the invested capital has fluctuated, the market value added and the MVA spread ratio have experienced a downward trend after 2021, indicating challenges in maintaining prior levels of value creation and investment efficiency. The stabilization of MVA in 2024, coupled with the continuing subdued spread ratio, suggests a cautious outlook for improving these metrics in the near term.

Market Value Added (MVA)

The market value added demonstrates a declining trend over the five-year period. Starting at 357,726 million USD at the end of 2020, it peaks slightly by the end of 2021 at 359,722 million USD, followed by a continuous decrease through 2022, 2023, and 2024, reaching 307,502 million USD. This decline suggests a reduction in the company's market valuation relative to invested capital during these years.

Sales to Customers

Sales exhibit moderate fluctuations across the years. From 82,584 million USD in 2020, sales increased to 93,775 million USD in 2021, then marginally rose to 94,943 million USD in 2022. However, in 2023, sales dropped sharply to 85,159 million USD before somewhat recovering to 88,821 million USD by the end of 2024. This pattern indicates variability in revenue generation with a notable setback in 2023, followed by partial recovery.

MVA Margin

The MVA margin, representing the ratio of market value added to sales, shows a downward trajectory overall. After standing at 433.17% in 2020, it decreased to 383.6% in 2021 and continued declining to 345.74% in 2022. There is a slight increase to 359.73% in 2023, followed by a reduction to 346.2% in 2024. This trend reflects diminishing efficiency in value creation relative to sales despite the brief improvement in 2023.

Overall Analysis

The data reveal a consistent decrease in market value added and MVA margin over the five years, accompanied by fluctuating sales figures. The decline in market valuation ratio alongside sales volatility might indicate challenges in sustaining growth or competitive pressures affecting profitability. The partial rebound in sales and MVA margin in 2024 suggests some stabilization, although the levels remain below earlier peaks.