President Trump’s executive order, which aimed to reduce U.S. drug prices to correspond with international rates, initially resulted in a negative reaction in the market for pharmaceutical stocks. However, these stocks later recovered as Wall Street analysts highlighted the significant legal challenges the order would face. The pharmaceutical sector argues that the elevated drug prices in the U.S. are crucial for financing the research and development (R&D) that leads to groundbreaking treatments, implying that price controls would directly threaten their substantial R&D investments.
The possible execution of the executive order poses risks for major pharmaceutical firms, including Johnson & Johnson (NYSE:JNJ). This brings us to the critical question of whether JNJ serves as a good investment at its current trading price of approximately $155. Our analysis indicates that it does. While recognizing minor concerns, we believe JNJ’s current valuation is justified. This conclusion is drawn from comparing its present valuation with its recent operational performance and its current and historical financial well-being. Our evaluation across essential metrics—Growth, Profitability, Financial Stability, and Downturn Resilience—shows that Johnson & Johnson exhibits robust operational performance and a strong financial condition, as detailed below. That being said, if you are looking for potential gains with lower volatility than individual stocks, the Trefis High Quality portfolio offers an alternative — having outperformed the S&P 500 and yielding returns exceeding 91% since its launch.
How Does Johnson & Johnson’s Valuation Compare to the S&P 500?
Based on your expenditure per dollar of sales or profit, JNJ stock is currently valued similarly to the overall market.
- Johnson & Johnson has a price-to-sales (P/S) ratio of 4.2 in comparison to a figure of 2.8 for the S&P 500
- Furthermore, the company’s price-to-free cash flow (P/FCF) ratio is 15.5 compared to 17.6 for the S&P 500
- Additionally, it has a price-to-earnings (P/E) ratio of 26.7 versus the benchmark’s 24.5
How Have Johnson & Johnson’s Revenues Evolved in Recent Years?
Johnson & Johnson’s Revenues have seen slight growth over recent years.
- Johnson & Johnson has experienced its revenue increase at an average rate of 4.1% over the last three years (compared to an increase of 6.2% for the S&P 500)
- Its revenues have increased by 4.3% from $86 Billion to $89 Billion in the past 12 months (compared to a growth of 5.3% for the S&P 500)
- Moreover, its quarterly revenues grew by 5.3% to $22 Billion in the most recent quarter from $21 Billion a year prior (compared to a 4.9% increase for the S&P 500)
How Profitable Is Johnson & Johnson?
Johnson & Johnson’s profit margins are around the average level for companies in the Trefis coverage universe.
Does Johnson & Johnson Appear Financially Stable?
Johnson & Johnson’s balance sheet looks solid.
- Johnson & Johnson’s Debt total was $37 Billion at the conclusion of the most recent quarter, while its market capitalization is $371 Billion (as of 5/12/2025). This suggests a strong Debt-to-Equity Ratio of 9.8% (compared to 21.5% for the S&P 500). [Note: A low Debt-to-Equity Ratio is preferable]
- Cash (including cash equivalents) constitutes $39 Billion of the $194 Billion in Total Assets for Johnson & Johnson. This results in a strong Cash-to-Assets Ratio of 13.6% (compared to 15.0% for the S&P 500)
How Resilient Is JNJ Stock During a Downturn?
JNJ stock has proven to be more resilient than the benchmark S&P 500 index through several recent downturns. Concerned about how a market crash might affect JNJ stock? Our dashboard How Low Can Johnson & Johnson Stock Go In A Market Crash? offers an in-depth analysis of the stock’s performance during and after past market crashes.
Inflation Shock (2022)
- JNJ stock dropped 21.7% from a peak of $186.01 on 25 April 2022 to $145.60 on 27 October 2023, while a peak-to-trough decline of 25.4% occurred for the S&P 500
- The stock has yet to return to its pre-Crisis high
- The highest price the stock has reached since that time is $167.70 on 10 March 2025, and it currently trades at around $155
COVID-19 Pandemic (2020)
- JNJ stock fell 27.8% from a high of $153.99 on 5 February 2020 to $111.14 on 23 March 2020, compared to a peak-to-trough decline of 33.9% for the S&P 500
- The stock fully bounced back to its pre-Crisis peak by 23 April 2020
Global Financial Crisis (2008)
- JNJ stock decreased 35.5% from a high of $72.22 on 8 September 2008 to $46.60 on 9 March 2009, against a peak-to-trough decline of 56.8% for the S&P 500
- The stock fully rebounded to its pre-Crisis peak by 18 October 2012
Assembling the Insights: What It Means for JNJ Stock
In conclusion, Johnson & Johnson’s performance across the criteria detailed above is as follows:
- Growth: Neutral
- Profitability: Neutral
- Financial Stability: Very Strong
- Downturn Resilience: Strong
- Overall: Strong
Overall, Johnson & Johnson (JNJ) has shown robust performance across the evaluated criteria. While its valuation in relation to the benchmark index is moderate, it appears appealing when compared with its own historical average. In particular, the current price-to-earnings (P/E) ratio of 15 times its trailing adjusted earnings is attractive compared to its five-year average P/E of 17 times. Consequently, we believe JNJ stock presents a solid buying opportunity at its current level of around $155.
While JNJ stock may achieve higher values, consider the Trefis Reinforced Value (RV) Portfolio, which has surpassed its all-cap stocks benchmark (a combination of the S&P 500, S&P mid-cap, and Russell 2000 benchmark indices) to deliver exceptional returns for investors. Why is that? The quarterly rebalanced composition of large-, mid-, and small-cap RV Portfolio stocks provided an adaptive approach to maximize favorable market conditions while minimizing losses when markets decline, as detailed in RV Portfolio performance metrics.
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