Furthermore, revenue growth has improved from negative territory in FY15, to single digit growth last year, and now 10%+ growth over the past four quarters. The acceleration here has mainly been driven by strong growth in its pharmaceutical segment, which accounts for nearly half of its overall business now. Despite the solid execution and improved growth rates, the stock is actually down about 9% on the year. The silver lining is that the dividend yield remains healthy, hovering around 2.75%.
As for its 2Q18 results, JNJ delivered EPS of $2.10, beating the $2.07 consensus, and up 15% year/year. While gross margin slipped a bit to 66.7% from 69.0% in the year ago quarter, JNJ did a good job managing costs. These were specifically, Sales, Marketing, and Admin expenses, as a percentage of sales, fell to 27.5% from 28.1%. Furthermore, these expenses were up a fairly modest 8.6% to $5.7 bln.
On the top-line, revenue climbed by 10.6% to $20.83 bln, also ahead of the $20.39 bln consensus. As noted above, it has been JNJ's pharmaceutical segment that has been the main catalyst for its upside results and its improved growth rates. For this quarter, pharmaceutical sales jumped by a solid 20% to $10.4 bln.
Bolstering its results in the pharma segment was its $30 bln acquisition of Swiss company, Actelion, back in January of last year. The acquisition added a line-up of new high-price, higher-margin medicines for rare diseases, while also expanding its presence in European markets. Excluding the impact of acquisitions, revenue in the pharmaceutical segment was up 11%.
The primary drag on its growth continues to be its stagnant consumer segment, which saw pedestrian growth of 0.7% year/year. When excluding the positive currency impact, revenue was actually lower by 0.4%. However, the general predictability and resilience to economic fluctuations is what makes this segment important to the company.
Lastly, its medical device segment grew 3.7% year/year to $7.0 bln, driven by ACUVUE contact lenses, as well as surgical products in its vision business, biosurgicals, would closure, and trauma products.
All in all, it was another solid performance from JNJ. The one knock would be that it slightly lowered its FY18 revenue guidance to $80.5-$81.3 bln from $81.0-$81.8 bln, vs. the $81.37 bln consensus. But, so far, investors are focusing in on the strong Q2 results.