Johnson and Johnson Financial Ratios by the Numbers: A Data Analysis for Investors
Johnson and Johnson financial ratios tell a consistent story across every major dimension of value analysis: a diversified healthcare company with a 3.1% dividend yield, a trailing P/E near 15.4, and a balance sheet that has survived two restructurings, a baby powder litigation wave, and a global pandemic without missing a quarterly payout. JNJ is a Dividend King with 62 consecutive years of dividend growth, which puts it in a peer group of fewer than 50 U.S. companies. What the numbers actually show, beneath the brand reputation, is a business that generates more free cash flow per dollar of revenue than most large-cap peers, funds its own R&D budget without borrowing, and still has room to return capital.
This analysis pulls JNJ's key ratios across valuation, profitability, dividend health, and balance sheet structure. Every figure comes from publicly reported data through early 2026. You can cross-check any of these numbers in our screener, which tracks 120+ indicators across 73 global exchanges.
Key Takeaways
- JNJ trades at a trailing P/E near 15.4, a discount to the S&P 500 median, partly reflecting litigation uncertainty from the talc spinoff via Kenvue.
- The dividend yield sits at 3.1% as of April 2026, backed by 62 consecutive years of annual dividend increases and a payout ratio under 55%.
- Return on equity runs near 23%, and return on invested capital has averaged above 18% over the past decade, both strong for a company this size.
- Debt-to-equity is modest at around 0.48, and JNJ holds more than $21 billion in cash and short-term investments as a buffer.
- The Piotroski F-Score for JNJ has consistently landed between 7 and 8 out of 9, indicating strong financial health across profitability, use, and efficiency signals.
- After the Kenvue spinoff in 2023, JNJ is now a pure-play pharmaceutical and medtech company, which changes the forward earnings profile investors need to model.
What Johnson and Johnson Financial Ratios Look Like Today
The table below summarizes JNJ's key ratios as of early 2026, with comparisons to the S&P 500 healthcare sector median.
| Ratio | JNJ (2026) | Healthcare Sector Median | S&P 500 Median |
|---|---|---|---|
| Trailing P/E | 15.4 | 18.7 | 22.8 |
| Forward P/E | 13.9 | 16.2 | 19.4 |
| Price-to-Book | 4.6 | 3.9 | 4.2 |
| Price-to-Free Cash Flow | 17.1 | 21.4 | 26.3 |
| EV/EBITDA | 11.8 | 14.2 | 16.7 |
| Dividend Yield | 3.1% | 1.4% | 1.5% |
| Payout Ratio | 54.2% | 38.7% | 31.4% |
| Debt-to-Equity | 0.48 | 0.61 | 0.71 |
| Return on Equity | 23.1% | 17.8% | 24.1% |
| Return on Invested Capital | 18.4% | 13.6% | 14.8% |
The trailing P/E of 15.4 sits below the healthcare sector median of 18.7 and well below the S&P 500 at 22.8. Part of that discount reflects litigation risk from talc-related claims and residual uncertainty around the Kenvue separation. Part of it reflects a genuine valuation gap that patient investors have historically been rewarded for tolerating.
Valuation Ratios: Cheap or Value Trap?
JNJ's P/E of 15.4 is not the full picture. EV/EBITDA at 11.8 and price-to-free-cash-flow at 17.1 both sit below sector medians, and when you adjust for the company's net cash position the enterprise value looks even more attractive. A Graham Number calculation using JNJ's EPS near $9.80 and book value near $26 per share produces an intrinsic value estimate around $83, though this mechanical formula understates the value of JNJ's pharmaceutical pipeline and medtech franchises.
The more useful lens is a discounted cash flow analysis anchored to free cash flow. JNJ generated approximately $18.4 billion in free cash flow over the trailing twelve months. At a 9% discount rate and a 3% terminal growth rate, a conservative DCF places intrinsic value in the $175 to $195 range. The stock has traded in the $145 to $165 band through early 2026, which suggests a margin of safety for investors using mid-range assumptions. Run your own figures through our DCF calculator to test different growth and discount rate scenarios.
Profitability Ratios: The Engine Under the Hood
Return on invested capital of 18.4% is the number that separates real compounders from ordinary businesses. JNJ has sustained ROIC above 15% in 9 of the last 10 years, meaning the company earns well above its cost of capital on the assets it deploys. This is the core criterion in the ValueMarkers VMCI Score's Quality pillar, which carries 30% of the total score.
Gross margin for JNJ's pharmaceutical segment runs near 68%, while the medtech segment operates at roughly 55%. These margins fund a $15+ billion annual R&D budget without requiring external financing. Net margin for the combined business sits around 22%, consistent with a company that does not need to cut prices to hold market share.
Operating cash flow conversion, defined as operating cash flow divided by net income, is approximately 1.21, meaning JNJ converts each dollar of reported earnings into more than a dollar of real cash. That ratio is a quality signal because it filters out accrual-based earnings manipulation.
Dividend Analysis: 62 Years Without a Cut
The 3.1% yield is high relative to JNJ's own 10-year average of around 2.5%. That spread reflects both a slightly depressed share price and a dividend that has grown from $4.24 per share in 2021 to $4.96 in 2025, a compound annual growth rate near 4%. The payout ratio of 54.2% is sustainable given free cash flow coverage of approximately 2.1x the annual dividend.
John Templeton famously looked for businesses trading at low price-to-earnings relative to their long-term earnings power. JNJ's 62-year dividend streak is a proxy for that earnings durability. No company cuts and then reinstates a dividend 62 times. The streak reflects consistent underlying cash generation, not accounting decisions.
| Year | Annual Dividend (USD) | Yield at Year-End | Payout Ratio |
|---|---|---|---|
| 2019 | 3.80 | 2.6% | 52.1% |
| 2020 | 4.04 | 2.5% | 55.8% |
| 2021 | 4.24 | 2.6% | 53.4% |
| 2022 | 4.52 | 2.8% | 56.2% |
| 2023 | 4.76 | 3.0% | 54.9% |
| 2024 | 4.96 | 3.1% | 54.2% |
Balance Sheet Analysis: How Much Debt Is Too Much?
JNJ's debt-to-equity of 0.48 is conservative by pharmaceutical standards. The company carries approximately $33 billion in long-term debt, which sounds large in absolute terms but is comfortably covered by $21+ billion in cash and generates interest coverage of roughly 12x on an EBIT basis. For context, the average large-cap pharmaceutical company runs debt-to-equity near 0.61.
The current ratio sits around 1.7, and the quick ratio is near 1.4, both above the thresholds that signal short-term liquidity comfort. JNJ's credit rating is AAA from S&P and Aaa from Moody's, one of only two U.S. companies to hold that distinction (the other is Microsoft). The AAA rating means JNJ borrows at rates close to U.S. Treasuries, which is a structural cost advantage.
Piotroski F-Score: Scoring the Full Picture
The Piotroski F-Score grades a company across 9 binary signals covering profitability, use/liquidity, and operating efficiency. A score of 8 or 9 signals strong financial health. JNJ has averaged an F-Score near 7.6 over the past five years, with recent scores at 7 or 8 out of 9.
The one signal JNJ sometimes fails is the share count metric. When the company has been actively buying back shares the score flips to 8, but in years when it issues shares for acquisitions the count grows and the signal turns negative. Everything else, positive return on assets, positive operating cash flow, improving gross margin, declining debt-to-assets ratio, consistently passes.
Running JNJ through the VMCI Score on ValueMarkers produces strong marks in the Value pillar (P/E discount to sector), Quality pillar (ROIC and operating cash flow), and Integrity pillar (long audit history, consistent reporting). The Growth pillar (12% weight) is the softer area given the mature pharmaceutical market and the post-Kenvue reset.
What the Post-Kenvue Restructuring Changes
The 2023 spinoff of Kenvue, which holds consumer brands like Tylenol, Listerine, and Band-Aid, transformed JNJ into a focused pharmaceutical and medtech business. This matters for ratio analysis in two ways.
First, it removed lower-margin consumer revenue from the top line, which makes the reported gross and net margins look better. Second, it reset the book value because Kenvue was carved out at a price that reflected consumer healthcare multiples, leaving JNJ with a smaller equity base. Investors comparing current price-to-book ratios with pre-2023 data are comparing different businesses.
The forward earnings consensus for the restructured JNJ implies EPS growth of roughly 5% to 7% annually through 2028, driven by pharmaceutical launches including Tecvayli, Talvey, and the cardiovascular portfolio. That growth rate, combined with the 3.1% yield, produces a total return case of roughly 8% to 10% annually from current prices.
Using JNJ Ratios to Compare Healthcare Peers
JNJ is not the only way to own defensive healthcare. Comparing its ratios against peers helps calibrate what you are actually paying.
| Company | P/E | P/FCF | Dividend Yield | ROIC | Debt/Equity |
|---|---|---|---|---|---|
| Johnson & Johnson (JNJ) | 15.4 | 17.1 | 3.1% | 18.4% | 0.48 |
| Abbott Laboratories (ABT) | 21.3 | 24.6 | 2.1% | 11.2% | 0.42 |
| Medtronic (MDT) | 14.8 | 15.9 | 3.4% | 9.8% | 0.56 |
| Pfizer (PFE) | 11.2 | 12.4 | 5.8% | 6.3% | 0.67 |
| Eli Lilly (LLY) | 47.6 | 52.1 | 0.6% | 29.4% | 0.91 |
JNJ sits in the middle of the quality-price tradeoff. It does not offer Pfizer's distressed yield or Eli Lilly's growth premium. It offers a combination of dividend consistency, balance sheet strength, and sustainable profitability that is hard to replicate in a single name.
Further reading: SEC EDGAR · Investopedia
Why JNJ valuation Matters
This section anchors the discussion on JNJ valuation. The detailed treatment, formula, and worked examples appear in the body of this article above. The points below summarize the most important takeaways for value investors who want to apply JNJ valuation in real portfolio decisions. ValueMarkers exposes the underlying data on every covered ticker via the screener and stock profile pages, so the concepts in this article translate directly into actionable filters.
Key inputs for JNJ valuation
See the main discussion of JNJ valuation in the sections above for the full treatment, including the inputs, the calculation methodology, the typical sector benchmarks, and the most common pitfalls to avoid. The ValueMarkers screener lets value investors filter the full universe of 100,000+ stocks across 73 exchanges using JNJ valuation alongside the rest of the 120-indicator composite, with sector percentiles and historical trends shown on every stock profile.
Sector benchmarks for JNJ valuation
See the main discussion of JNJ valuation in the sections above for the full treatment, including the inputs, the calculation methodology, the typical sector benchmarks, and the most common pitfalls to avoid. The ValueMarkers screener lets value investors filter the full universe of 100,000+ stocks across 73 exchanges using JNJ valuation alongside the rest of the 120-indicator composite, with sector percentiles and historical trends shown on every stock profile.
Related ValueMarkers Resources
- Pe Ratio — Glossary entry for Pe Ratio
- Graham Number — Graham Number captures how cheaply a stock trades relative to its fundamentals
- Piotroski F-Score — Piotroski F-Score captures the reliability of reported earnings versus underlying cash flow
- Jnj Dividend History — related ValueMarkers analysis
- Healthcare Value Stocks — related ValueMarkers analysis
- Value Investing Stock Analysis Criteria — related ValueMarkers analysis
Frequently Asked Questions
what financial planning is about ontpinvest
Financial planning in a value investing context means building a portfolio around companies with durable cash flows, defined dividend policies, and balance sheets that can survive economic downturns without diluting shareholders. For a stock like JNJ, financial planning starts with understanding the payout ratio (54.2%), the ROIC (18.4%), and the free cash flow yield so you can project income and total return over a 5 to 10 year horizon rather than reacting to quarterly noise.
what is financial ratio analysis
Financial ratio analysis is the practice of distilling a company's financial statements into standardized metrics that allow comparison across time, peers, and sectors. For JNJ, the most revealing ratios are ROIC (18.4%), EV/EBITDA (11.8), the payout ratio (54.2%), and free cash flow conversion (1.21), because they each measure a different dimension of business quality: capital efficiency, valuation, income sustainability, and earnings quality.
how to read stock market charts and graphs
Charts and graphs for a stock like JNJ are most useful when read alongside ratio context. A price chart showing JNJ falling 15% tells you the stock is cheaper in absolute terms, but the useful question is whether the P/E is now at or below its 10-year historical average of about 16.2. When the trailing P/E drops below that average and the dividend yield rises above 3%, the chart is signaling an entry point that historical data supports. Our screener overlays these thresholds automatically.
what is financial leverage ratio formula
The most common financial leverage ratio is debt-to-equity: total debt divided by total shareholders' equity. For JNJ, that calculation is approximately $33 billion in debt divided by $69 billion in equity, producing a ratio of 0.48. A second useful use metric is the interest coverage ratio, which for JNJ sits near 12x, meaning the company earns 12 dollars of operating income for every dollar of interest it pays. Lower use and higher coverage both reduce the risk that a recession or revenue miss forces the company to cut the dividend.
when comparing company financial ratios with industry ratios
When comparing JNJ's ratios to healthcare sector medians, the most actionable gaps are the P/E discount (15.4 versus 18.7 sector median) and the ROIC premium (18.4% versus 13.6% sector median). A company that earns more on capital than its peers but trades at a lower multiple than its peers either has a specific risk the market is pricing, which in JNJ's case is litigation, or is genuinely undervalued relative to business quality. Separating those two explanations requires reading the litigation disclosures, not just the ratio table.
why are financial ratios important
Financial ratios matter because they translate raw dollar figures into information you can actually use. JNJ's $93 billion in 2025 revenue is meaningless on its own. Knowing that JNJ converts 22% of that revenue to net income, deploys capital at an 18.4% return, and has grown its dividend for 62 consecutive years turns the revenue figure into an investment thesis. Ratios also make it possible to compare a $400 billion company with a $40 billion company on equal terms, which is the foundation of every value investor's stock selection process.
Use our guru tracker to see how value-oriented institutional investors have positioned in JNJ and which ratios they weight most heavily in their buy and sell decisions.
Written by Javier Sanz, Founder of ValueMarkers. Last updated April 2026.
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Disclaimer: This content is for informational and educational purposes only and does not constitute investment advice, a recommendation, or an offer to buy or sell any security. Past performance does not guarantee future results. Consult a licensed financial advisor before making investment decisions.