(By Tim) Johnson & Johnson will release the company's first quarter financial results on April 20, 2010 before the market open. A conference call will be held at 8:30 AM eastern time, hosted by . Dominic Caruso, VP, Finance and CFO, and Louise Mehrotra, VP, Investor Relations.
The consensus estimate from the Wall Street analysts for the first quarter J&J earnings is $1.27 per share. The estimates range from a low of $1.22 up to $1.33. The forecast for the quarter's revenues is $15.62 billion. In the first quarter of 2009, Johnson & Johnson earned $1.26 per share on sales of $15.03 billion.
For the previous four quarters, the actual earnings came in at 4 to 7 cents higher that the consensus, but basically in line with what the Street was expecting. JNJ earned $4.63 per share for all of 2009, with the first quarter showing the highest net profit.
Johnson & Johnson is a component of the Dow Jones Industrial Average and on everyone's list of large-cap, stable dividend paying companies. The discussion around the quarterly earnings is not focused on how much they will be, but instead what will management announce for the 2010 dividend rate. JNJ is a component of S&P's Dividend Aristocrats list of companies that have increased their payout for at least 25 consecutive years.
In 2009, J&J declared a $1.96 annual dividend compared to the $1.82 payout in 2008. The 7.7% increase in the dividend was about half of the historical rate of dividend increases from the company. Earnings per share for 2009 are projected to be $4.90, providing plenty of room for a dividend boost. However, to give a 10% or better boost to the dividend, the board of directors will need to exceed the company's historical payout ratio.
Johnson & Johnson derives revenues from three sectors. For 2009, Medical Devices and Diagnostics contributed 38% of revenues, Pharmaceutical sales were 36% and Consumer sales contributed 26% of revenues. Pharma sales declined over 8% in 2009 and is the sector with the biggest opportunity to provide a boost in 2010.
If Johnson & Johnson is to beat the consensus for this quarter, the Pharmaceutical sales will need to show an increase after several quarters of decline. J&J has several new drugs that should start contributing sales to offset declining sales of older drugs. The Hepatitis C treatment drug, Telaprevir has the potential to be a block buster, but probably will not launch until 2011.
Johnson & Johnson may not provide a big surprise on the earnings front this quarter, but the company has a chance to affect the stock and overall market with the declaration of the 2010 dividend. Will the board be confident of growing revenues and profits or will it stay conservative and only make a token increase to the dividend?
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