Johnson & Johnson (NYSE:JNJ) stock is up 15% this year, significantly outperforming the broader S&P 500 index, which is down 1%. This performance gap can be attributed to market volatility, with investors concerned about Trump’s recent tariff policies and their potential impact on inflation and the economy. During uncertain times, investors typically seek defensive investments like pharmaceutical companies. J&J stands out as an industry leader and offers an attractive dividend yield of nearly 3%. For a comprehensive analysis on current risks, including the effects of tariffs on the broader market, please refer to our detailed report on market crash risk right now.
After its recent rise, JNJ stock looks fairly priced – making it an ambivalent pick to buy at its current price of around $165. We believe there are some minor concerns with JNJ stock, which makes it fairly priced given that its current valuation looks high.
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. However, if you seek upside with less volatility than a single stock, consider the High-Quality portfolio, which has outperformed the S&P 500 and achieved returns greater than 91% since 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 slightly expensive 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. 6.9% growth for S&P 500)
• Its revenues have grown 4.3% from $85 Bil to $89 Bil in the last 12 months (vs. an increase 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% rise 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 $397 Bil (as of 3/6/2025). 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 Stocks Go During A Market Crash captures how key stocks fared during and after the last six 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 $165
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
This is aligned with the stock’s high valuation because of which we think it is fairly priced, which supports our conclusion that JNJ is an ambivalent stock to buy.
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.
Invest with Trefis
Market Beating Portfolios | Rules-Based Wealth