As of July 22, 2025, Johnson & Johnson's estimated intrinsic value ranges from $124.96 to $264.14 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $174.54 | +6.2% |
| Discounted Cash Flow (5Y) | $166.53 | +1.3% |
| Dividend Discount Model (Multi-Stage) | $155.62 | -5.3% |
| Dividend Discount Model (Stable) | $264.14 | +60.7% |
| Earnings Power Value | $124.96 | -24.0% |
Is Johnson & Johnson (JNJ) undervalued or overvalued?
With the current market price at $164.36, the stock appears to be fairly valued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Johnson & Johnson's intrinsic value, including:
The cost of capital is a critical factor in valuation models, representing the required return for investors.
| WACC Component | Low | High |
|---|---|---|
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.47 | 0.53 |
| Cost of equity | 6.0% | 7.8% |
| Cost of debt | 5.1% | 7.7% |
| Tax rate | 12.2% | 13.8% |
| Debt/Equity ratio | 0.09 | 0.09 |
| After-tax WACC | 5.9% | 7.7% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $167 | $430,178M | 84.5% |
| 10-Year Growth | $175 | $449,451M | 70.2% |
| 5-Year EBITDA | $76 | $213,146M | 68.7% |
| 10-Year EBITDA | $95 | $259,216M | 48.4% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $22,109M |
| Discount Rate (WACC) | 7.7% - 5.9% |
| Enterprise Value | $286,017M - $374,304M |
| Net Debt | $29,503M |
| Equity Value | $256,514M - $344,801M |
| Outstanding Shares | 2,406M |
| Fair Value | $107 - $143 |
| Selected Fair Value | $124.96 |
| Metric | Value |
|---|---|
| Market Capitalization | $395462M |
| Enterprise Value | $424965M |
| Trailing P/E | 17.45 |
| Forward P/E | 25.23 |
| Trailing EV/EBITDA | 7.40 |
| Current Dividend Yield | 303.22% |
| Dividend Growth Rate (5Y) | 3.06% |
| Debt-to-Equity Ratio | 0.09 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 30% | $52.36 |
| Discounted Cash Flow (5Y) | 25% | $41.63 |
| Dividend Discount Model (Multi-Stage) | 20% | $31.12 |
| Dividend Discount Model (Stable) | 15% | $39.62 |
| Earnings Power Value | 10% | $12.50 |
| Weighted Average | 100% | $177.23 |
Based on our comprehensive valuation analysis, Johnson & Johnson's intrinsic value is $177.23, which is approximately 7.8% above the current market price of $164.36.
Key investment considerations:
Given these factors, we believe Johnson & Johnson is currently fairly valued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.