Johnson & Johnson (JNJ) Intrinsic Value & DCF Valuation
Drug Manufacturers - General · NYSE
Current Price
$268.73
Intrinsic Value
$331.65
+19.0% margin of safety
What Is Johnson & Johnson's Intrinsic Value?
As of 2026-10-27, the base-case DCF model estimates the intrinsic value of Johnson & Johnson (JNJ) at $331.65 per share, compared with a market price of $268.73, a margin of safety of +19.0%. The base case assumes 12.6% annual free cash flow growth and a 10.0% discount rate.
Across the sensitivity grid the estimate spans $278.56 to $391.75. Intrinsic value is an estimate built on assumptions, not a fact. A higher discount rate or slower growth pushes the estimate down, while stronger cash flow growth lifts it.
How the DCF works · Recalculate with your own assumptions · What is intrinsic value?
Is Johnson & Johnson (JNJ) Undervalued?
At $268.73, JNJ trades about 19.0% below the base-case intrinsic value estimate. That is a real discount, but it stays short of the 30% margin of safety required before calling a stock undervalued.
COMPETITIVE MOAT
↑Dominant Pharmaceutical Portfolio
JNJ possesses a vast and diversified portfolio of blockbuster drugs with strong patent protection. This creates significant pricing power and high switching costs for healthcare providers and patients.
↑Global Scale and Distribution Network
Its extensive global reach and established distribution channels allow JNJ to efficiently bring products to market worldwide. This scale advantage is difficult for smaller competitors to replicate.
↑Brand Reputation and Trust
Johnson & Johnson is a highly trusted name in healthcare, built over decades of innovation and quality. This brand equity fosters customer loyalty and facilitates new product adoption.
INVESTMENT RISKS
↓Regulatory Scrutiny and Litigation
The pharmaceutical industry is subject to intense regulatory oversight and potential litigation. Adverse rulings or new regulations could significantly impact JNJ's profitability and operations.
↓Pipeline Innovation Uncertainty
While JNJ has a strong track record, the success of future drug development is inherently uncertain. A weak pipeline could jeopardize its long-term growth and competitive standing.
↓Market Reaction to Guidance and Earnings
Despite strong financial performance, the stock's negative reaction to earnings and raised guidance indicates investor concerns. This suggests potential underlying issues or market skepticism about future growth.
Base case
JNJ base case valuation
Intrinsic Value
$331.65
Margin of safety
+19.0%
Expected annual return
+4.3%
Base case assumptions: 12.6% annual growth, 10.0% discount rate, 30x exit multiple, 5 year projection. Data as of 2026-10-27.
This base case uses default assumptions and is not financial advice. The intrinsic value changes significantly when the growth rate or discount rate changes. Open the calculator to set your own assumptions and see the full sensitivity range.
Customize the JNJ valuation
Adjust the growth rate, discount rate, and exit multiple to see how the intrinsic value and margin of safety for Johnson & Johnson respond.
Open DCF Calculator for JNJCompany Overview
Johnson & Johnson is a holding company, which engages in the research, development, manufacture, and sale of products in the healthcare field. It operates through the Innovative Medicine and MedTech segments. The Innovative Medicine segment focuses on immunology, infectious diseases, neuroscience, oncology, cardiovascular and metabolism, and pulmonary hypertension. The MedTech segment includes a portfolio of products used in interventional solutions, orthopaedics, surgery, and vision categories. The company was founded by Robert Wood Johnson I, James Wood Johnson, and Edward Mead Johnson Sr. in 1887 and is headquartered in New Brunswick, NJ.
Financial Metrics — JNJ Stock Valuation Data
Revenue/Share (TTM)
$40.59
FCF/Share (TTM)
$8.41
ROIC (TTM)
15.4%
ROE (TTM)
19.6%
P/FCF
31.7x
EV/EBITDA
22.1x
FCF Yield
3.16%
Debt/Equity
0.55x
Based on trailing twelve-month data, JNJ shows a free cash flow per share of $8.41 and a ROIC of 15.4%, key inputs for stock valuation using the DCF method. The P/FCF ratio of 31.7x and FCF yield of 3.16% are important context metrics when evaluating JNJ's stock valuation relative to peers.
Frequently Asked Questions
What is the intrinsic value of JNJ?
Johnson & Johnson currently generates $8.41 in free cash flow per share. At the current price of $268.73, a DCF model would discount these cash flows at an appropriate WACC and apply a terminal growth rate to arrive at an intrinsic value. The result depends heavily on your growth and discount rate assumptions — a 1% change in WACC typically shifts the fair value estimate by 10-15%. In MiniValuator the model uses a single discount rate that you can edit directly, 10% by default, rather than a computed WACC.
Is JNJ undervalued?
JNJ trades at a P/FCF ratio of 31.7x with a free cash flow yield of 3.16%. This P/FCF is in a moderate range. However, whether JNJ is truly undervalued requires comparing the DCF intrinsic value to the current market price and evaluating whether the margin of safety is sufficient for your risk tolerance.
How do I value JNJ stock using DCF?
To perform a DCF valuation on Johnson & Johnson: (1) Start with the trailing free cash flow per share ($8.41) 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 — with a debt-to-equity of 0.55x, capital structure is an important factor, and (4) add a terminal value for cash flows beyond the projection period.
What is DCF valuation and how does it apply to JNJ?
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 company will produce over the next 5-10 years, shaped by Drug Manufacturers - General trends, then discounting those amounts to today's dollars. JNJ's ROIC of 15.4% reflects how efficiently the company converts invested capital into profit.
How does WACC affect JNJ stock valuation?
WACC (Weighted Average Cost of Capital) is the discount rate in a DCF model — it reflects the minimum return investors require. For JNJ, with a debt-to-equity ratio of 0.55x, the capital structure directly influences WACC. A 1% increase in WACC typically reduces the intrinsic value by 10-15%. At an EV/EBITDA of 22.1x, the market's implied discount rate can be reverse-engineered for comparison. In MiniValuator you set this discount rate yourself as a single editable number, 10% by default, instead of computing a formal WACC.
Learn More
- See JNJ PE Valuation → — Earnings-based stock valuation using PE ratio analysis
- DCF Methodology — Step-by-step guide to discounted cash flow analysis
- PE Methodology — Guide to PE ratio stock valuation
- WACC — Understanding the discount rate used in DCF
- Margin of Safety — How to evaluate downside protection
- Intrinsic Value — How to evaluate stock fair value
- How to Calculate Intrinsic Value — Complete guide for investors
Related Valuations
All Healthcare valuationsDCF and P/E value JNJ with different methods and assumptions, so the two conclusions can differ. Compare the P/E fair value.
Price as of 2026-10-27. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.