Johnson & Johnson (NYSE:JNJ) stock dropped 7% on Tuesday, April 1, following a significant legal setback. U.S. Bankruptcy Judge Christopher Lopez in Houston rejected the company’s third attempt to resolve its talc-related liabilities through Chapter 11 bankruptcy. The judge determined that J&J had employed a flawed process when seeking votes from personal injury claimants. [1] J&J will now proceed with addressing the pending talc-related lawsuits through the civil court system.
Now that the JNJ stock has seen a 7% fall, does the current price point make it attractive?
Our analysis indicates that JNJ stock is a favorable pick at its current price of approximately $155. While noting some minor concerns, we anticipate upside potential driven by its moderate valuation.
We arrive at our conclusion by comparing the current valuation of JNJ stock with its operating performance over the recent years as well as its current and historical financial condition. Our analysis of Johnson & Johnson along key parameters of Growth, Profitability, Financial Stability, and Downturn Resilience shows that the company has a strong operating performance and financial condition, as detailed below. That said, if you seek upside with lower volatility than individual stocks, the Trefis High-Quality portfolio presents an alternative – having outperformed the S&P 500 and generated returns exceeding 91% since its inception.
How Does Johnson & Johnson’s Valuation Look vs. The S&P 500?
Going by what you pay per dollar of sales or profit, JNJ stock looks moderate compared to the broader market.
- Johnson & Johnson has a price-to-sales (P/S) ratio of 4.5 vs. a figure of 3.2 for the S&P 500
- Additionally, the company’s price-to-operating income (P/EBIT) ratio is 17.9 compared to 24.3 for S&P 500
- And, it has a price-to-earnings (P/E) ratio of 16.4 vs. the benchmark’s 24.3
How Have Johnson & Johnson’s Revenues Grown Over Recent Years?
Johnson & Johnson’s Revenues have grown marginally over recent years.
- Johnson & Johnson has seen its top line grow at an average rate of 4.1% over the last 3 years (vs. increase of 6.3% for S&P 500)
- Its revenues have grown 4.3% from $85 Bil to $89 Bil in the last 12 months (vs. growth of 5.2% for S&P 500)
- Also, its quarterly revenues grew 5.3% to $23 Bil in the most recent quarter from $21 Bil a year ago (vs. 5.0% improvement for S&P 500)
How Profitable Is Johnson & Johnson?
Johnson & Johnson’s profit margins are much higher than most companies in the Trefis coverage universe.
- Johnson & Johnson’s Operating Income over the last four quarters was $22 Bil, which represents a high Operating Margin of 24.9% (vs. 13.0% for S&P 500)
- Johnson & Johnson’s Operating Cash Flow (OCF) over this period was $24 Bil, pointing to a high OCF-to-Sales Ratio of 27.3% (vs. 15.7% for S&P 500)
Does Johnson & Johnson Look Financially Stable?
Johnson & Johnson’s balance sheet looks strong.
- Johnson & Johnson’s Debt figure was $37 Bil at the end of the most recent quarter, while its market capitalization is $369 Bil (as of 4/1/2025). This implies a strong Debt-to-Equity Ratio of 9.2% (vs. 19.0% for S&P 500). [Note: A lower Debt-to-Equity Ratio is desirable]
- Cash (including cash equivalents) makes up $25 Bil of the $180 Bil in Total Assets for Johnson & Johnson. This yields a moderate Cash-to-Assets Ratio of 13.6% (vs. 14.8% for S&P 500)
How Resilient Is JNJ Stock During A Downturn?
JNJ stock has been more resilient than the benchmark S&P 500 index during some of the recent downturns. Worried about the impact of a market crash on JNJ stock? Our dashboard How Low Can Johnson & Johnson Stock Go In A Market Crash? has a detailed analysis of how the stock performed during and after previous market crashes.
Inflation Shock (2022)
- JNJ stock fell 13.9% from a high of $186.01 on 25 April 2022 to $160.20 on 9 October 2022, vs. a peak-to-trough decline of 25.4% for the S&P 500
- The stock is yet to recover to its pre-Crisis high
- The highest the stock has reached since then is $180.25 on 8 January 2023 and currently trades at around $155
Covid Pandemic (2020)
- JNJ stock fell 25.9% from a high of $149.93 on 23 February 2020 to $111.14 on 23 March 2020, vs. a peak-to-trough decline of 33.9% for the S&P 500
- The stock fully recovered to its pre-Crisis peak by 17 April 2020
Global Financial Crisis (2008)
- JNJ stock fell 35.5% from a high of $72.22 on 8 September 2008 to $46.60 on 9 March 2009, vs. a peak-to-trough decline of 56.8% for the S&P 500
- The stock fully recovered to its pre-Crisis peak by 18 October 2012
Putting All The Pieces Together: What It Means For JNJ Stock
In summary, Johnson & Johnson’s performance across the parameters detailed above are as follows:
- Growth: Neutral
- Profitability: Very Strong
- Financial Stability: Strong
- Downturn Resilience: Very Strong
- Overall: Strong
We believe Johnson & Johnson (JNJ) presents a good buying opportunity at the $155 level, supported by its strong performance across key parameters and a still-moderate valuation. While near-term risks exist, including the impact of tariffs on pharmaceutical companies, broader market uncertainties, and the company’s ongoing talc litigations, we believe these are largely accounted for in the current price. This is further underscored by JNJ’s current trading multiple of 14x forward expected earnings, which is below its five-year average P/E ratio of 17x.
Preserve & Grow Wealth with Risk-Focused Quality Portfolios
While it doesn’t look like there is much upside to JNJ stock, the Trefis Reinforced Value (RV) Portfolio, which has outperformed its all-cap stocks benchmark (combination of the S&P 500, S&P mid-cap, and Russell 2000 benchmark indices) to produce strong returns for investors. Why is that? The quarterly rebalanced mix of large-, mid- and small-cap RV Portfolio stocks provided a responsive way to make the most of upbeat market conditions while limiting losses when markets head south, as detailed in RV Portfolio performance metrics.
Market Beating Portfolios | Rules-Based Wealth