Johnson & Johnson (JNJ) Fair Value & PE Analysis
Drug Manufacturers - General · NYSE
Current Price
$240.87
PE Ratio (TTM)
28.0x
Intrinsic Value
$285.02
+15.5% margin of safety
What Is Johnson & Johnson's Fair Value?
As of 2026-06-12, applying a 28.0x earnings multiple to Johnson & Johnson's (JNJ) earnings per share of $8.6 yields a fair value estimate of $285.02 per share, versus a market price of $240.87.
Fair value from earnings multiples is sensitive to the multiple you choose. Across the sensitivity grid the estimate spans $237.89 to $338.57. 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 our PE model works · Recalculate in PE mode · JNJ intrinsic value (DCF view)
Is Johnson & Johnson (JNJ) Overvalued?
At $240.87, JNJ trades about 15.5% below its PE-based fair value estimate, a modest discount to its earnings power, though not enough for us to call it cheap outright.
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 PE valuation
Intrinsic Value
$285.02
Margin of safety
+15.5%
Expected annual return
+3.4%
Base case assumptions: 10.1% annual earnings growth, 28x target PE, 10% discount rate, 5 year projection. Data as of 2026-06-12.
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 (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 PE Stock Valuation Data
PE Ratio (TTM)
28.0x
PEG Ratio
n/m
Earnings Yield
3.57%
ROE (TTM)
26.3%
Revenue/Share (TTM)
$39.41
Dividend Yield
2.18%
Debt/Equity
0.68x
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 28.0x combined with a PEG ratio of -6.35 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 (28.0x) against the Drug Manufacturers - General median to assess relative pricing, (2) check the PEG ratio (-6.35) 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 -6.35, calculated by dividing the PE ratio (28.0x) 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 26.3%, 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 2026-06-12. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.