Johnson & Johnson (JNJ) — Fundamental Analysis & Key Financial Ratios

Kaplio's reading: Johnson & Johnson

Updated on October 31, 2026 · accounts published on October 13, 2026

A highly profitable healthcare business with returns well above its sector

Johnson & Johnson trades at a P/E of 41.4 over the last 12 months, 75 % above its ten-year median and higher than 99 % of the past decade.

• Is Johnson & Johnson expensive or cheap? The P/E of 41.4 is 75 % above its ten-year median of 23.7 and 36 % above the healthcare sector median.
• How is the business doing? Revenue grew 6 % over the last 12 months while EPS jumped 91 %; ROIC of 15.4 % is nearly triple the sector median.
• How strong is the balance sheet? Net debt is 0.7× EBITDA in fiscal 2025, and the dividend has risen for 11 consecutive years with a 46 % payout.
• What to expect from the next earnings? Next earnings on January 20, 2027: analysts expect EPS of $2.91, after a 3.6 % cut to the 2026 consensus in 30 days.
• Does it invest enough in R&D and turn profit into cash? R&D was 15.6 % of revenue in fiscal 2025, just above the 15 % bar, but free cash flow covered only 74 % of net income.

Is Johnson & Johnson expensive or cheap?

Over the last 12 months Johnson & Johnson trades at a P/E of 41.4, 75 % above its ten-year median of 23.7 and close to the decade high of 42.5. In 99 % of the last ten years it traded at a lower multiple. The premium also holds against its peers: the median P/E of 246 healthcare companies is 30.4, so the stock trades 36 % above it. The yields point the same way, with an earnings yield of 4.9 % and a free cash flow yield of 3.6 %. The multiple expanded alongside the share price, which rose 47 % in 12 months and sits 2 % below its 52-week high of $278.43.

How is the business doing?

Over the last 12 months revenue grew 6 % and EPS rose 91 %, so earnings grew far faster than sales. Margins are steady rather than expanding: an operating margin of 26 % over the last 12 months matches the 2014-2025 average and sits just below the 27 % of fiscal 2025. Returns are where Johnson & Johnson stands out. ROIC of 15.4 % is 9.8 points above the median of 346 healthcare companies (5.6 %), and it stayed above 10 % in 9 of the last 10 fiscal years, with 2017 (1.1 %) the only miss. ROE is 20 % and net margin 16 %.

How strong is the balance sheet?

Debt is modest. Net debt of $11.86 per share at the end of fiscal 2025 equals 4.3 % of the current price and 0.7× EBITDA, well under the 2.5× ceiling considered healthy in healthcare. Debt to equity is 0.55 and the Altman Z of 4.7 sits in the safe zone. Liquidity is tighter, with a current ratio of 1.02, and a Piotroski score of 4 out of 9 over the last 12 months is middling. The dividend yields 1.9 %, has grown for 11 consecutive fiscal years and absorbed 46 % of fiscal 2025 earnings, which leaves room to keep raising it.

What to expect from the next earnings?

Johnson & Johnson has beaten EPS estimates in 7 of the last 8 quarters. On October 13, 2026 it reported $2.59 against $2.52 expected, a 2.8 % beat. Even so, the 2026 EPS consensus fell 3.6 % in the last 30 days, from $11.53 to $11.11 across 11 analysts, while the revenue estimate barely moved, so analysts are trimming profits and leaving sales expectations intact. Of 40 analysts, 21 rate the stock a buy, 16 a hold and 3 a sell. With the P/E near its decade high, the January 20, 2027 report, where EPS of $2.91 is expected, leaves little margin for disappointment.

Does it invest enough in R&D and turn profit into cash?

In healthcare the R&D pipeline is the invisible asset: patents expire and the revenue they protect disappears, so the sector watches innovation and cash flow more than a single year of earnings. Johnson & Johnson spent 15.6 % of revenue on R&D in fiscal 2025, just over the 15 % considered healthy. A gross margin of 73 % clears the 70 % mark for branded pharma by a thin margin, and EPS grew 14.6 % a year over 2020-2025, well above the 8 % bar. The weak spot is cash: free cash flow equaled 74 % of net income in fiscal 2025, short of the 90 % that signals healthy conversion.

How this was prepared: the data comes from companies' official filings, collected by a professional provider, and from Kaplio's analysis engine (trailing-12-month ratios, 10 years of history and sector medians computed across US-listed companies). The text is written from that data alone, every figure is checked against it before publication, and it is reviewed when the company reports results. This is not investment advice.