Johnson & Johnson (JNJ) Intrinsic Value & DCF Valuation
Drug Manufacturers - General · NYSE
Current Price
$256.48
Intrinsic Value
$287.71
+10.9% margin of safety
What Is Johnson & Johnson's Intrinsic Value?
As of 2026-10-08, the base-case DCF model estimates the intrinsic value of Johnson & Johnson (JNJ) at $287.71 per share, compared with a market price of $256.48, a margin of safety of +10.9%. The base case assumes 11.5% annual free cash flow growth and a 10.0% discount rate.
Across the sensitivity grid the estimate spans $241.55 to $340. 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 $256.48, JNJ trades about 10.9% 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
↑Global Pharmaceutical Scale
JNJ's vast global reach and extensive R&D capabilities allow it to develop and market a wide range of innovative drugs. This scale creates significant barriers to entry for smaller competitors.
↑Diversified Healthcare Portfolio
The company's presence across pharmaceuticals, medical devices, and consumer health provides resilience. This diversification reduces reliance on any single product or market segment.
↑Strong Brand Recognition
Johnson & Johnson is a trusted name in healthcare globally. This long-standing reputation fosters customer loyalty and facilitates market penetration for new products.
INVESTMENT RISKS
↓Talc Litigation and Liabilities
Ongoing lawsuits related to talcum powder products present substantial financial and reputational risks. The outcome of these legal battles remains uncertain.
↓Drug Development Pipeline Uncertainty
The success of future revenue streams depends on the R&D pipeline. Clinical trial failures or delays can significantly impact growth prospects.
↓Increasing Healthcare Costs and Payer Pressure
Governments and private insurers are increasingly pressuring drug prices. This can limit JNJ's ability to achieve premium pricing for its innovative therapies.
Base case
JNJ base case valuation
Intrinsic Value
$287.71
Margin of safety
+10.9%
Expected annual return
+2.3%
Base case assumptions: 11.5% annual growth, 10.0% discount rate, 30x exit multiple, 5 year projection. Data as of 2026-10-08.
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)
$40.13
FCF/Share (TTM)
$7.67
ROIC (TTM)
13.9%
ROE (TTM)
25.7%
P/FCF
33.3x
EV/EBITDA
19.3x
FCF Yield
3.00%
Debt/Equity
0.58x
Based on trailing twelve-month data, JNJ shows a free cash flow per share of $7.67 and a ROIC of 13.9%, key inputs for stock valuation using the DCF method. The P/FCF ratio of 33.3x and FCF yield of 3.00% 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 $7.67 in free cash flow per share. At the current price of $256.48, 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 33.3x with a free cash flow yield of 3.00%. 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 ($7.67) 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 0.58x, 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 13.9% 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 0.58x, the capital structure directly influences WACC. A 1% increase in WACC typically reduces the intrinsic value by 10-15%. At an EV/EBITDA of 19.3x, 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 2026-10-08. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.