Johnson & Johnson (JNJ) Intrinsic Value & DCF Valuation
Drug Manufacturers - General · NYSE
Current Price
$240.87
Intrinsic Value
$260.22
+7.4% margin of safety
What Is Johnson & Johnson's Intrinsic Value?
As of 2026-06-12, our base-case DCF model estimates the intrinsic value of Johnson & Johnson (JNJ) at $260.22 per share, compared with a market price of $240.87, a margin of safety of +7.4%. The base case assumes 10.1% annual free cash flow growth and a 10.0% discount rate.
Across the sensitivity grid the estimate spans $218.35 to $307.71. 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 our DCF works · Recalculate with your own assumptions · What is intrinsic value?
Is Johnson & Johnson (JNJ) Undervalued?
At $240.87, JNJ trades about 7.4% below our base-case intrinsic value estimate. That is a real discount, but it stays short of the 30% margin of safety we require before calling a stock undervalued.
COMPETITIVE MOAT
↑Global Pharmaceutical Scale
J&J's vast global reach and extensive R&D pipeline allow for significant market penetration and the development of blockbuster drugs. This scale creates high barriers to entry for competitors.
↑Diversified Healthcare Portfolio
Beyond pharmaceuticals, J&J's presence in MedTech and consumer health provides revenue stability and cross-selling opportunities. This diversification mitigates risks associated with any single segment.
↑Brand Trust and Reputation
Decades of delivering trusted healthcare products have built immense brand equity. This consumer and physician loyalty translates into sustained demand and pricing power.
INVESTMENT RISKS
↓Patent Expirations
Loss of exclusivity on key drugs like Stelara will lead to significant revenue erosion from generic competition. J&J must continuously innovate to replace these lost sales.
↓Ongoing Litigation
While recent talc lawsuit wins are positive, the persistent threat of large legal settlements and reputational damage remains. Future adverse rulings could impact financial stability.
↓Geopolitical and Regulatory Pressures
Increased scrutiny and pricing pressures in markets like China, coupled with evolving global regulations, can impact J&J's growth trajectory and profitability.
Base case
JNJ base case valuation
Intrinsic Value
$260.22
Margin of safety
+7.4%
Expected annual return
+1.6%
Base case assumptions: 10.1% annual growth, 10.0% discount rate, 30x exit multiple, 5 year projection. Data as of 2026-06-12.
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 (JNJ) operates globally, engaging in the research, development, production, and distribution of a diverse range of healthcare products. In a pivotal strategic move in 2023, the company divested its Consumer Health division, establishing it as the independent entity Kenvue Inc. This separation was implemented to allow J&J to sharpen its focus on higher-growth, innovation-led areas. Consequently, well-known consumer brands like TYLENOL, LISTERINE, and BAND-AID are now part of Kenvue's portfolio. Johnson & Johnson's current operations are centered around two primary divisions: Innovative Medicine and MedTech. The Innovative Medicine segment, formerly known as Pharmaceuticals, specializes in prescription drugs designed to treat complex ailments such as rheumatoid arthritis, various forms of cancer, HIV/AIDS, and neurodegenerative disorders. Its MedTech division, encompassing Medical Devices, delivers cutting-edge technological solutions, including electrophysiology equipment, neurovascular care products, orthopaedic implants for hips, knees, and spine, advanced surgical technologies, and ACUVUE brand disposable contact lenses. These two streamlined segments primarily cater to a client base comprising hospitals, medical professionals, wholesale distributors, and retail outlets. From its headquarters in New Brunswick, New Jersey, Johnson & Johnson continues to uphold its enduring mission of advancing human health, a commitment it has maintained since its founding in 1886.
Financial Metrics — JNJ Stock Valuation Data
Revenue/Share (TTM)
$39.41
FCF/Share (TTM)
$7.28
ROIC (TTM)
13.6%
ROE (TTM)
26.3%
P/FCF
32.6x
EV/EBITDA
18.3x
FCF Yield
3.07%
Debt/Equity
0.68x
Based on trailing twelve-month data, JNJ shows a free cash flow per share of $7.28 and a ROIC of 13.6%, key inputs for stock valuation using the DCF method. The P/FCF ratio of 32.6x and FCF yield of 3.07% 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 $7.28 in free cash flow per share. At the current price of $240.87, 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 32.6x with a free cash flow yield of 3.07%. 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 ($7.28) 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 0.68x, 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 13.6% shows moderate capital returns.
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 0.68x, the capital structure directly influences WACC. A 1% increase in WACC typically reduces the intrinsic value by 10-15%. At an EV/EBITDA of 18.3x, 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 2026-06-12. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.