After Johnson & Johnson (NYSE:JNJ) reported fourth quarter and full year results on Tuesday, the company's shares declined by a couple of points. I'll take a look at whether the results were indeed bad, or whether the market has overreacted.
Johnson & Johnson's shares are down four percent over the last two weeks, whilst the market has reached a new all time high today, as the Dow Jones index broke through 20,000 for the first time ever.
During the fourth quarter Johnson & Johnson has grossed revenues of $18.1 billion, up 2% over the prior year's quarter. That revenue growth rate does not sound great, but the company's underlying operational growth was masked by two factors: First, currency rates once again changed for the worse during the last year, which had a negative impact of roughly one percentage point, and at the same time the number of shipping days during the last year's fourth quarter was not equal to the number of shipping days in 2015. According to Johnson & Johnson this meant a 480 base point impact, which means that, if we adjust for those two factors, revenues would have been up by roughly 7% year on year.
