US Equities Analysis

JNJ — Johnson & Johnson

Research evidence pack

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2. Company Fundamentals

2.1 Competitiveness

Metric Value
Operating Margins 27.41%
Profit Margins 21.83%
Return on Equity 26.42%
Return on Assets 8.42%
Free Float 2.4B
Dividend Yield 2.10%
Short Int % Utilisation 1.08%

2.2 Growth

Metric Value
Revenue Growth 9.9%
Free Cash Flow 12.51B
EBITDA 17.68 (Ratio)
Enterprise Value 607.03B
EV/Revenue 6.3
EV/EBITDA 17.68

Revenue growth of 9.9% indicates steady, moderate expansion.

2.3 Management

Role Metric
Consensus Rating N/A

2.4 Return

Metric Value
Expected Return (Ann.)* 54.11%
Risk / Std Dev (Ann.)* 18.31%
1-Year Price Return* 51.07%

Latest Market Data (as of 2026-08-14, US Eastern time):

Metric Value
Last Price $260.35
52-Week Range $173.33 – $274.90
Observation Count 251 trading days

The return and risk statistics use daily adjusted closes from the retrieved one-year series and annualise daily moments using 252 trading days. The last price is the latest regular-market price reported for the stated date. Source: Yahoo Finance market data.

2.5 FCFF DCF Valuation

Valuation basis: This research model follows a five-year, unlevered FCFF DCF. It starts from reported annual operating inputs, forecasts revenue and operating cash conversion under an explicit mechanical policy, discounts FCFF at WACC, applies a Gordon-growth terminal value, and bridges enterprise value to an indicative common-equity value per share. It is an analytical estimate rather than a recommendation or personalised target price.

Step 1 — Forecast Operating Profit and NOPAT

Reported operating input Value
Revenue $94.19B
Prior annual revenue $88.82B
EBIT $33.55B
Tax rate 17.73%
NOPAT = EBIT × (1 − tax rate) $27.60B
Forecast start-growth basis 6.05%
Forecast policy latest reported annual revenue growth, bounded to -10.00% / 15.00%

Step 2 — Calculate FCFF

Current FCFF building block Value
NOPAT $27.60B
Add: depreciation & amortisation $7.50B
Less: capital expenditure -$5.22B
Less/(add): working-capital cash-flow movement -$12.72B
Current unlevered FCFF $17.17B

Explicit FCFF forecast

Forecast year Revenue growth NOPAT D&A Capex Change in NWC FCFF Present value
1 6.05% $29.27B $7.96B -$5.53B -$13.49B $18.21B $17.71B
2 5.16% $30.78B $8.37B -$6.46B -$14.18B $18.51B $17.03B
3 4.27% $32.10B $8.73B -$7.40B -$14.79B $18.64B $16.23B
4 3.39% $33.19B $9.02B -$8.33B -$15.29B $18.58B $15.30B
5 2.50% $34.02B $9.25B -$9.25B -$15.67B $18.34B $14.29B

Step 3 — Determine the Discount Rate (WACC)

WACC input Value
Risk-free rate 4.71%
Equity risk premium assumption 5.50%
Beta 0.23
Cost of equity 5.98%
Pre-tax cost of debt 2.30%
WACC 5.70%
WACC validation requires assumption review

Step 4 — Estimate Terminal Value

Terminal-value input Value
Perpetuity growth rate 2.50%
Terminal value $587.17B
Implied terminal EV / EBITDA 11.61x
Terminal value as % of enterprise value 84.67%

Step 5 — Discount Cash Flows to Enterprise Value

Enterprise-value component Value
Present value of explicit FCFF $80.57B
Present value of terminal value $444.99B
Indicated enterprise value $525.56B
Discounting convention mid-year for explicit FCFF; terminal value discounted at year-end five

Step 6 — Convert Enterprise Value to Equity Value

Equity bridge Value
Indicated enterprise value $525.56B
Less: gross interest-bearing debt $47.93B
Add: cash and equivalents $20.10B
Add: affiliate investments $0.00
Less: minority interests $0.00
Indicated common equity value $497.73B

Step 7 — Calculate Indicative Value Per Share

Per-share output Value
Shares used 2,429,400,000.00
Share-count basis reported diluted weighted-average shares
Current market price $270.40
DCF indicative value per share $204.88
Indicative value vs. market price -24.23%

Model Integrity Checks

Check Result
Perpetuity growth is below the risk-free rate pass
Perpetuity growth is below WACC pass
WACC is within the configured operating-company range review required
Terminal-year FCFF is positive pass
Terminal capex converges to D&A pass
Terminal-value concentration within review band
Implied price differs from spot by more than 30% within review band

2.6 Investor-Style Research Screen

Educational screen Result
Buffett-inspired cash-quality checks 3/4 evidenced checks
Lynch-inspired balance-and-growth checks 4/4 evidenced checks

Data lineage: Yahoo Finance public market and reported-statement data; retrieval timestamp: 2026-08-18 17:38:59.268441 UTC; latest reported fiscal period: 2025-12-31 00:00:00. Default assumptions: five-year forecast, mid-year discounting for explicit FCFF, a maximum 2.50% perpetuity-growth rate below both WACC and the risk-free rate, historical operating-ratio persistence, and capex convergence to D&A by year five. No sell-side consensus or management guidance is substituted for reported inputs. This is research and analysis only, not personalized financial advice.

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