Johnson & Johnson (JNJ) Fair Value & PE Analysis
Drug Manufacturers - General · NYSE
Current Price
$268.73
PE Ratio (TTM)
41.1x
Intrinsic Value
$335.46
+19.9% margin of safety
What Is Johnson & Johnson's Fair Value?
As of 2026-10-27, applying a 41.2x earnings multiple to Johnson & Johnson's (JNJ) earnings per share of $6.52 yields a fair value estimate of $335.46 per share, versus a market price of $268.73.
Fair value from earnings multiples is sensitive to the multiple you choose. Across the sensitivity grid the estimate spans $287.83 to $388.97. This is a relative estimate anchored to earnings, not a statement of fact. For a cash flow based view, see the intrinsic value estimate on the DCF page.
How the PE model works · Recalculate in PE mode · JNJ intrinsic value (DCF view)
Is Johnson & Johnson (JNJ) Overvalued?
At $268.73, JNJ trades about 19.9% below its PE-based fair value estimate, a modest discount to its earnings power, though not enough to call it cheap outright.
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 PE valuation
Intrinsic Value
$335.46
Margin of safety
+19.9%
Expected annual return
+4.5%
Base case assumptions: 12.5% annual earnings growth, 41.22x target PE, 10% discount rate, 5 year projection. Data as of 2026-10-27.
This base case uses default assumptions and is not financial advice. The fair value changes significantly when the target PE or earnings growth rate changes. Open the calculator to set your own assumptions and see the full sensitivity range.
Customize the JNJ PE valuation
Adjust the target PE, earnings growth, and discount rate to see how the fair value and margin of safety for Johnson & Johnson respond.
Open PE 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 PE Stock Valuation Data
PE Ratio (TTM)
41.1x
PEG Ratio
n/m
Earnings Yield
2.43%
ROE (TTM)
19.6%
Revenue/Share (TTM)
$40.59
Dividend Yield
1.95%
Debt/Equity
0.55x
Frequently Asked Questions
What is the PE ratio of JNJ?
The trailing twelve-month PE ratio of JNJ reflects how much investors pay per dollar of Johnson & Johnson's earnings. This metric is most useful when compared to Drug Manufacturers - General peers and the company's own historical range.
Is JNJ overvalued based on PE ratio?
JNJ's PE of 41.1x combined with a PEG ratio of -1.12 provides a growth-adjusted perspective. JNJ has negative earnings, so its PE and PEG ratios are not meaningful here and cannot tell you whether the stock is over or undervalued. Keep in mind that PE-based valuation works best for profitable, mature companies — for high-growth or cyclical Drug Manufacturers - General, a DCF analysis may be more appropriate.
How do I value JNJ stock using PE ratio?
To value Johnson & Johnson using PE: (1) Compare the current PE (41.1x) against the Drug Manufacturers - General median to assess relative pricing, (2) check the PEG ratio (-1.12) to adjust for growth expectations, (3) review the 5-year PE range to identify where the stock sits historically, and (4) estimate fair value by multiplying a target PE by forward EPS estimates. This relative approach complements DCF's absolute valuation.
What is the PEG ratio of JNJ?
JNJ's PEG ratio is -1.12, calculated by dividing the PE ratio (41.1x) by the expected earnings growth rate. Because JNJ has negative earnings, its PEG ratio is not meaningful and should not be read as a sign of under or overvaluation. Note that PEG accuracy depends on the reliability of growth estimates.
Should I use PE ratio or DCF for JNJ stock valuation?
PE ratio gives a quick relative read — how JNJ is priced versus Drug Manufacturers - General peers. DCF provides an absolute value based on projected free cash flows. For JNJ, with a strong ROE of 19.6%, both methods are worth using — PE for a market-relative check, DCF to stress-test whether fundamentals justify the price. Each method has blind spots: PE ignores capital structure and cash flow quality, while DCF is sensitive to growth and discount rate assumptions.
Learn More
- See JNJ DCF Valuation → — Intrinsic value via Discounted Cash Flow analysis
- PE Methodology — Step-by-step guide to PE ratio stock valuation
- DCF Methodology — Guide to discounted cash flow analysis
- PE Ratio — Understanding the price-to-earnings ratio
- Intrinsic Value — How to evaluate stock fair value
Related PE Valuations
All Healthcare valuationsP/E and DCF value JNJ with different methods and assumptions, so the two conclusions can differ. Compare the DCF intrinsic 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.