JOHNSON & JOHNSON (JNJ) Stock Analysis
JOHNSON & JOHNSON (JNJ) Stock Analysis
Analysis from 10-Q filed 2025-10-22. Data as of Q4 2025.
Overall Grade: F (Concerning)
JOHNSON & JOHNSON faces challenges in financial performance that warrant careful analysis.
| Metric | Value | Context |
|---|---|---|
| ROIC | 17.7% | Solid returns |
| FCF Margin | 20.9% | Strong cash generation |
Investment Thesis: Strong return on invested capital of 17.7% suggests durable competitive advantages and efficient capital allocation.
Explore JOHNSON & JOHNSON: Earnings History | Filing Intelligence | ROIC Analysis
Profitability: JOHNSON & JOHNSON earns 17.7% ROIC, Top 25% in Healthcare
JOHNSON & JOHNSON's trailing-twelve-month ROIC of 17.7% ranks Top 25% in Healthcare companies (sector median: -3.9%), driven by NOPAT margin of 22.4% combined with asset turnover of 0.5x. Source: 10-Q filed 2025-10-22. Gross margin of 67.9% with operating margin at 27.2% reflects strong pricing power.
| Metric | JNJ | Rating | Context |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 17.7% | Good | Above sector median of -3.9% |
| Return on Equity (ROE) | 34.4% | Excellent | Efficient use of shareholder equity |
| Gross Margin | 67.9% | Excellent | Strong pricing power |
| Operating Margin | 27.2% | Excellent | Efficient operations |
Cash Flow: JOHNSON & JOHNSON generates $19.7B FCF at 20.9% margin, positive NaN/8 quarters
JOHNSON & JOHNSON generated $19.7B in free cash flow (TTM), a 20.9% FCF margin, a margin that ranks Top 5% in Healthcare. FCF was positive in N/A of the last 8 quarters. Source: 10-Q filed 2025-10-22.
| Metric | JNJ | Rating | Context |
|---|---|---|---|
| Free Cash Flow Margin | 20.9% | Excellent | Excellent cash conversion |
| Free Cash Flow (TTM) | $19.7B | Good | Positive cash generation |
| OCF/Net Income | 0.9x | Good | Potential accrual concerns |
| FCF Consistency (8Q) | N/A | Warning | Variable cash flow |
Balance Sheet Analysis for JOHNSON & JOHNSON
Total debt of $47.9B offset by $20.1B in cash. Source: 10-Q filed 2025-10-22.
| Metric | JNJ | Rating | Context |
|---|---|---|---|
| Net Cash Position | $-27.8B | Warning | Net debt position |
Valuation: JOHNSON & JOHNSON trades at 18.7x earnings
JOHNSON & JOHNSON trades at a P/E of 18.7x. Free cash flow yield of 3.9% reflects market expectations for growth.
| Metric | JNJ | Rating | Context |
|---|---|---|---|
| P/E Ratio | 18.7x | Adequate | Reasonable valuation |
| EV/Sales | 5.6x | Adequate | Growth premium priced in |
| FCF Yield | 3.9% | Adequate | Lower cash yield |
| Dividend Yield | 2.5% | Adequate | Growth focus over income |
Capital Allocation: JOHNSON & JOHNSON returns 3.7% shareholder yield
JOHNSON & JOHNSON's total shareholder yield is 3.7% (dividends 2.5% + buybacks 1.2%). Source: 10-Q filed 2025-10-22.
| Metric | JNJ | Rating | Context |
|---|---|---|---|
| Total Shareholder Yield | 3.7% | Good | Dividend + buyback yield combined |
| Buyback Yield | 1.2% | Adequate | Minimal buyback activity |
| Total Capital Returned (TTM) | $18.3B | Good | Dividends + buybacks returned to shareholders |
Sector Rankings
| Metric | Value | Percentile | vs Median |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 17.7% | Top 25% | - |
| Free Cash Flow Margin | 20.9% | Top 5% | - |
| Gross Margin | 67.9% | Top 50% | 1.1x above |
| Operating Margin | 27.2% | Top 25% | 14.2x above |
| Return on Equity (ROE) | 34.4% | Top 25% | - |
| P/E Ratio | 18.7x | N/A | - |
Financial Scorecard
| Metric | JNJ | Rating | Sector Context |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 17.7% | Good | Top 25% of sector (median: -3.9%) |
| Free Cash Flow Margin | 20.9% | Excellent | Top 5% of sector (median: 0.0%) |
| Gross Margin | 67.9% | Excellent | Top 50% of sector (median: 64.0%) |
| P/E Ratio (Price-to-Earnings) | 18.7x | Adequate | Fair value |
| Free Cash Flow Yield | 3.9% | Adequate | Moderate yield |
Frequently Asked Questions
Q: What is JOHNSON & JOHNSON's Return on Invested Capital (ROIC)?
JOHNSON & JOHNSON (JNJ) has a trailing twelve-month Return on Invested Capital (ROIC) of 17.7%. This compares above the sector median of -3.9%. An ROIC between 12-20% indicates solid capital allocation and sustainable competitive position.
Q: What is JOHNSON & JOHNSON's Free Cash Flow Margin?
JOHNSON & JOHNSON (JNJ) has a free cash flow margin of 20.9%, generating $19.7 billion in free cash flow over the trailing twelve months. A FCF margin above 20% indicates excellent cash conversion and a high-quality business model.
Q: Is JOHNSON & JOHNSON stock overvalued or undervalued?
JOHNSON & JOHNSON (JNJ) trades at a P/E ratio of 18.7x, which is above the sector median of N/A. The EV/Sales multiple is 5.6x. Free cash flow yield is 3.9%, which is in line with market averages.
Q: Does JOHNSON & JOHNSON pay a dividend?
JOHNSON & JOHNSON (JNJ) currently pays a dividend yield of 2.5%. Including share buybacks, the total shareholder yield is 3.7%. This yield is moderate, suggesting a balance between income and growth reinvestment.
Q: What is JOHNSON & JOHNSON's revenue and earnings growth?
JOHNSON & JOHNSON (JNJ) grew revenue by 6.0% year-over-year. Earnings per share increased by 90.7% compared to the prior year. Modest growth indicates a mature business with stable demand.
Q: Is JOHNSON & JOHNSON buying back stock?
JOHNSON & JOHNSON (JNJ) repurchased $6.0 billion of stock over the trailing twelve months. This represents a buyback yield of 1.2%.
Q: How does JOHNSON & JOHNSON compare to competitors in Healthcare?
Compared to other companies in Healthcare, JOHNSON & JOHNSON (JNJ) shows: ROIC of 17.7% is above the sector median of -3.9% (Top 21%). FCF margin of 20.9% exceeds the sector median of 0.0% (Top 0% of sector). Gross margin at 67.9% is 3.9 percentage points higher than sector peers. These rankings are based on MetricDuck's analysis of all Healthcare companies with available SEC filings.
Q: What warning signs should I watch for with JOHNSON & JOHNSON?
Investors in JOHNSON & JOHNSON (JNJ) should monitor these potential warning signs: 1) ROIC has been declining, potentially signaling deteriorating competitive position. Regular monitoring of SEC filings and quarterly trends is recommended.
Data Source: Data sourced from 10-Q filed 2025-10-22. TTM metrics as of Q4 2025.
Methodology: Financial metrics calculated from SEC 10-K and 10-Q filings using standardized formulas. Sector comparisons use peer group based on SIC code.
Scope: This analysis covers SEC filing fundamentals — profitability, cash flow, balance sheet, and valuation metrics. For analyst estimates and price targets, consult sell-side research.
This analysis is for informational purposes only and does not constitute investment advice.