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2/16/2009
Criteria over 10yrsValuePointsUser Points
> 25% or 50% depending onmoat
30%
0
> 66%
54%
0Criteria over 10yrsValuePointsUser Points
10%
11.3%
1
30%
71.2%
1
15%
25.0%
1
10%
17.6%
1
10%
13.9%
1Criteria over 10yrsValuePointsUser Points
15%
13.4%
0
13%
28.4%
2
10%
14.6%
1
7%
16.7%
2
Consistent over 10yrs
N/AN/A
Consistent over 10yrs
N/AN/A
Criteria for TTMValuePointsUser Points
> 1.5 x current liabilities
1.5 
1
N/A
3.84 
N/A
N/A
< 100%86.9%
1
> 10%27.7%
1
< 30%14%
1
< 15% of assets32.6%
0
Current assets > 1.5 x current liabilitiesMedian FCF/SalesConsistent ROE (manually check)Consistent ROA (manually check)Median Gross MarginMedian Operating MarginMedian Net MarginMedian EPS growth
Business and Management Performance
CROIC is postive and capable of paying off financingMedian FCF growth positive and consistent
Balance SheetValuation
DCF Valuation DiscountGraham Intrinsic Value Discount
Margins, Profit and Growth
Company Nameticker
JOHNSON & JOHNSONJNJ
all figures in $Mil
Company Assessment: Quantitative
Intangibles % of assetsMedian Revenue growthDebt to EquityFCF to DebtCapitalization RatioPrice to Book ratio < 2Cash growth from Operations
 
User PointsMax Points2
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2
max 2
1
max 2
2
max 2
0
max 2
2
max 2
User PointsMax Points1
max 2
1
max 1
1
max 1
0
max 1
1
max 1
2
max 2
1
max 1
0
max 1
User PointsMax Points1
max 1
1
max 1
1
max 1
1
max 1
User PointsMax Points1
max 1
1
max 1
1
max 1
CommentCommentCommentComment
a) Nob) Yesc) Nod) YesCompete on price? (1 for no, 0 for yes)Barriers of entry to the business?Diverse customers? (1 for diverse, 0 for concentrated)Involved in competition? Monopoly, duopoly, crowdedCompany has a recurring revenue stream?Capital intensive company?Compensation levels compared to sales?
Industry
Boring industry? (1 for slow, 0 for fast industry)Can company adapt to changing industry environment?Industry leader or lagger? (1 for leader, 0 for lagger)Network effect? E.g. eBay
Management
High insider ownership?Candid management on positives and negatives?Management performance at previous jobs?
Business Model
Growth due to:a) existing product / existing market (yes/no)b) existing product / new market (yes/no)c) new product / existing market (yes/no)d) new product / new market (yes/no)Able to increase prices and retain customers?
Competitive Advantage
Stable market share?Dominant company in industry, segment?Low barriers to entry and exit?Experience goods (brand effect, trademarks)High switching costs?
Company Assessment: Qualitative
Johnson & Johnson is engaged in the research and development, manufacture and sale of a range of products in the healthcarefield. Johnson & Johnson has more than 250 operating companies. The Company operates in three segments: Consumer,Pharmaceutical, and Medical Devices and Diagnostics. Sales of the Company's two largest products, RISPERDAL and REMICADE,accounted for approximately 6% and 5% of Johnson & Johnson
￿s total revenues, respectively, during the fiscal year ended
December 30, 2007 (fiscal 2007). During fiscal 2007, the Company acquired three companies: Conor Medsystems, Inc., which is acardiovascular device company, with new drug delivery technology; Robert Reid, Inc., which is a Japanese orthopedic productdistributor, and Maya
￿s Mom, Inc., which is a social media company. In October 2008, the Company acquired HealthMedia, Inc. In
December 2008, Johnson & Johnson acquired Omrix Biopharmaceuticals, Inc.
Psychological Factors to Consider. Not Weighted.
Recency bias?Hindsight bias?Framing issues correctly and in different manners?Is there a data framing bias?Am I too overconfident on the situation?Performed probability analysis for -ve factors?Too much loss aversion?Sunk cost mentality?Slow in changing opinion?Psychological denial ?Bias from commitment and consistency tendency?Pavlovian association?Social proof bias?Status quo bias?False consensus bais?
Comment
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