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According to these comparative findings, Procter & Gamble is in a weaker financial position
than its top competitor, Johnson & Johnson. The market capitalization of Johnson & Johnson is
in the top billions just like Procter & Gambles, which means both companies are of similar size.
This makes Johnson & Johnson a comparable competitor.
Procter & Gamble (PG) is one of the leaders in the personal products industry, but it is still not
the strongest competitor. The lack of financial growth in comparison to Johnson & Johnson
(JNJ) has left P&G as the weaker contender. This analysis focuses on comparing key indicators
of financial strength, which include stock price, market capitalization, revenue, P/E ratio, net
income, and EPS.
Financials
PG
225.60B
22.21
3.75
JNJ
293.45B
19.90
5.23
In comparison to Johnson & Johnson, Procter & Gamble has a lower market cap, and EPS. These
are all indicators that Procter & Gamble is financially weaker.
The earnings per share (EPS) of a company can indicate how profitable the company is. When
comparing the EPS of both of these companies, it is clear that Johnson & Johnson has a higher
EPS. Therefore, Johnson & Johnson seems to be more profitable than Procter & Gamble. This
further solidifies that Johnson & Johnson is the stronger competitor in the personal products
industry.
The price to earnings ratio is an indicator of future growth. Therefore, Procter & Gamble is
expected to have higher growth than Johnson & Johnson according to the P/E ratio. However,
other indicators such as revenue and net income suggest that Johnson & Johnson has been
growing at a higher rate than Procter & Gamble.
80
60
PG
40
JNJ
20
0
2011
2012
2013
At first glance, Procter & Gamble has higher revenue than Johnson & Johnson. The historical
data shows that J&J has had significant growth in revenue over the past three years. Unlike
Johnson & Johnson, Procter & Gamble has had fairly low revenue growth over the past three
years. This has significance when analyzing the strength of Procter & Gamble. Although initially
the numbers seem higher, analyzing historical financial data gives a better representation of the
financial strength of the company. Net income over the past three years for both companies also
shows similar results. In fact, for the year 2013, Johnson & Johnson had a higher net income than
Procter & Gamble.
Dollars
15
10
PG
JNJ
5
0
2011
2012
2013
This chart shows that Johnson & Johnson has also been stronger than Procter & Gamble in
reference to net income. Over the past three years, J&Js net income has not only been greater,
but it is also growing at a faster rate than P&G. When only comparing 2012 and 2013, J&J has
had an approximate three billion dollar increase in net income. P&G on the other hand, has seen
less than one billion dollar increase.
Stock Price
PG
79.89
80.56
83.82
83.31
83.54
JNJ
95.50
101.49
103.81
103.09
103.23
Based on this table, Procter & Gamble shows slow growth in stock price, as opposed to Johnson
& Johnsons higher stock price growth. Furthermore, the overall stock price of Johnson &
Johnson is higher which means that the investors are more confident in J&J rather than P&G.
Also the demand for that stock could increase the price as well, which proves that J&J is a
stronger company because its stocks are more in demand.
Valery Shapovalova
Valery Shapovalova
Junior Analyst, Procter & Gamble
Date: 09/06/2014
References
Johnson & Johnson. (JNJ) (2014). Income statement, annual. Yahoo! Finance. Retrieved
from
http://finance.yahoo.com/q/is?s=JNJ+Income+Statement&annual
Johnson & Johnson. (JNJ) (2014). Historical Prices. Yahoo! Finance. Retrieved from
http://finance.yahoo.com/q/hp?s=JNJ+Historical+Prices
The Procter & Gamble Company. (2014). Form 10-K 2014. Retrieved from
http://www.pginvestor.com/interactive/lookandfeel/4004124/PG_2014_10K.pdf
The Procter & Gamble Company. (PG) (2014). Income statement, annual. Yahoo!
Finance. Retrieved from http://finance.yahoo.com/q/is?s=PG&annual
The Procter & Gamble Company. (PG) (2014). Competitors. Yahoo! Finance. Retrieved
from http://finance.yahoo.com/q/co?s=PG+Competitors
The Procter & Gamble Company. (PG) (2014). Historical Prices. Yahoo! Finance.
Retrieved from http://finance.yahoo.com/q/hp?s=PG+Historical+Prices