Johnson & Johnson is buying $10 billion worth of itself

Johnson & Johnson (NYSE:JNJ) announced its revenue for the third quarter that fell short of expectations, hurt by currency fluctuation and low demand for its Remicade arthritis treatment and blood clot preventer, Xarelto. The company has already bought back about $5 billion worth of JNJ stock in a program launched past year. Year-to-Date the stock performance stands at -6.18%. The company reported $1.49 earnings per share (EPS) for the quarter, beating the consensus estimate of $1.45 by $0.04. Given the current share price, this results in a price-to-earnings multiple of 15.5x, close to that of peers like Pfizer Inc, Merck & Co., Inc. and Novartis AG (ADR). Stock buybacks also allow insiders to exercise stock options by not diluting the shares afloat in the market, thus protecting the stock price from dropping.

The supposed “positive” news of buybacks was, however, offset by the negative news of the company’s third-quarter earnings. Analysts, on average, expected $17.45 billion.

The shares opened for trading at $95.07 and hit $96.47 on the upside, eventually ending the session at $95.99, with a gain of 0.65% or 0.62 points. It has led to a roughly 2% reduction in the company’s share count this quarter, and a negligible impact on EPS. The roughly 2% reduction in the share count had a mostly immaterial impact to the EPS numbers.

For its part, Johnson & Johnson can comfortably handle the extra debt needed to retire about 4 percent of its market cap. Zacks raised shares of Johnson & Johnson from a hold rating to a buy rating and set a $109.00 price target for the company in a research report on Tuesday, June 30th. For the First half of the year, Johnson & Johnson (NYSE:JNJ) generated $6.7 billion in free cash flow. The Company is engaged in the research and development, manufacture and sale of a variety of products in the health care field.

The company said in the press release: “Fastenal is a growth focused organization and we constantly strive to make investments into the growth drivers of our business”.

Looking at J&J’s three main segments, declines in dollar-denominated sales were roughly equal, but operational results were much different.

The company posted solid sales growth in a good number of its pharmaceutical products. The company informed investors that they would receive a payout in the amount of $0.75 per share for shareholders of record on 2015-08-25, payable on 2015-09-08.