Drug Manufacturers - General · NYSE
Current Price
$227.35
Intrinsic Value
Use the calculator below to estimate
Run a full DCF analysis on Johnson & Johnson with auto-filled fundamentals, adjustable assumptions, and sensitivity heatmap.
Johnson & Johnson, together with its subsidiaries, researches and develops, manufactures, and sells various products in the healthcare field worldwide, but strategically separated its Consumer Health business into Kenvue Inc. in 2023 to focus on its higher-growth, innovation-driven segments; the former Consumer Health brands (including TYLENOL, LISTERINE, and BAND-AID) are now owned by Kenvue. The company's core focus is now split between its Innovative Medicine (formerly Pharmaceutical) segment, which offers prescription products for complex diseases such as rheumatoid arthritis, various cancers, HIV/AIDS, and neurodegenerative disorders; and its MedTech (Medical Devices) segment, which provides advanced technology solutions including electrophysiology products, neurovascular care products, orthopaedics (hips, knees, spine), advanced surgery solutions, and disposable contact lenses under the ACUVUE brand. Company's two remaining segments primarily serve hospitals, healthcare professionals, wholesalers, and retailers, continuing its mission of advancing human health since its founding in 1886 and its current basing in New Brunswick, New Jersey.
ROIC (TTM)
13.6%
ROE (TTM)
26.3%
FCF Yield
3.25%
Based on trailing twelve-month data, JNJ shows a free cash flow per share of N/A and a ROIC of 13.6%, key inputs for stock valuation using the DCF method. The P/FCF ratio of N/A and FCF yield of 3.25% are important context metrics when evaluating JNJ's stock valuation relative to peers.
The intrinsic value of JNJ depends on assumptions about future growth rate, discount rate (WACC), and terminal value. A DCF model discounts projected free cash flows back to present value — small changes in WACC can shift the estimate by 20% or more, which is why sensitivity analysis is essential.
Whether JNJ is undervalued depends on comparing the DCF-derived intrinsic value to the current market price of $227.35. A positive margin of safety (intrinsic value above market price) suggests potential undervaluation, but the degree of confidence depends on the reliability of your growth and discount rate assumptions.
To perform a DCF valuation on Johnson & Johnson: (1) Start with the trailing free cash flow per share as the base, (2) project future FCF growth over 5-10 years based on Drug Manufacturers - General industry trends and company fundamentals, (3) apply a discount rate (WACC) reflecting JNJ's risk profile, and (4) add a terminal value for cash flows beyond the projection period.
DCF (Discounted Cash Flow) estimates what a company is worth today based on its future cash generation. For Johnson & Johnson, this means projecting how much free cash flow the Drug Manufacturers - General will produce over the next 5-10 years, then discounting those amounts to today's dollars. JNJ's ROIC of 13.6% shows moderate capital returns.
WACC (Weighted Average Cost of Capital) is the discount rate in a DCF model — it reflects the minimum return investors require. For JNJ, the capital structure and equity risk premium determine WACC. A 1% increase in WACC typically reduces the intrinsic value by 10-15%.
