After the earnings for Johnson & Johnson (JNJ) were released this morning, I was getting some of my dry powder ready to pounce. The pre-market had the shares down nearly 1.5%, as sales of $16.5 billion was down about 1% from last year.
Not only that, sales were down in the U.S., as well as the rest of the world in total. In addition, there were currency issues that had a negative impact as well. As we always try to do with dividend investing, we were ready and able to gobble up some shares on the dip, which we thought would be dramatic.
"Johnson & Johnson today announced sales of $16.5 billion for the second quarter of 2012, a decrease of 0.7% as compared to the second quarter of 2011. Operational results increased 3.5% and the negative impact of currency was 4.2%. Domestic sales decreased 1.2%. International sales decreased 0.4%, reflecting operational growth of 7.1% and a negative currency impact of 7.5%. Sales included the impact of the recently completed acquisition of Synthes, Inc., which contributed 1.2% to worldwide operational sales growth."
Now let's get real folks, this was not a glowing earnings report! Since I own the stock forever, I was chomping at the bit! Okay, so earnings per share were up by a slim 1.6% when all charges had been taken into account, nothing to write home about, right? We were ready!
Then the news flashes that Johnson and Johnson will be lowering its guidance for 2012! Oh boy, this will definitely, absolutely, positively, give another little downward nudge on the share price. Bargain binge buying: here we come!
"The Company adjusted its earnings guidance for full-year 2012 to $5.00 - $5.07 per share. The Company's guidance excludes the impact of special items and reflects the negative impact of recent currency movements, partially offset by the positive contribution from the Synthes acquisition."
Yep, there it was. We had visions of $65.00/share dancing in our heads. Then the market opened.
I admit it. We were greedy, we should have taken the buck drop and ran with it, but I just did not think that the talking heads on TV had fully understood how weak this report was, so I waited. Needless to say, because as you can see, the stock closed at $69.00/share, UP by $.55/share. Holy cow Batman, what the heck happened?
Wall Street shrugged off the dip in revenues, that's what happened. Investors focused on the long haul and bought up shares for the dividend, the brand, the size, and overall impact of Johnson & Johnson in all of our lives. I will bet you that investors—both individual and institutional—listened intently to the earnings call this morning, which you can read right here, for all of the lovely details, and there were many!
It's a defensive stock, it's a value stock, it's a growth (gulp) stock!
It is an everyman (woman) stock folks. A stock that can be held forever, and debating when to get into a position has proven fruitless because the price keeps going up. Yes I know the stock CAN, and will, go down, and up, and sideways, so if you want to wait, that's fine also I guess.
Can you imagine what will happen when the economy picks up and just a few of the promising drugs Johnson & Johnson has are finally approved? We might miss the bell again! Who knows, but it sure was a remarkable day for Johnson & Johnson.