Buffett Brain · Research note
Score updated 21 Oct 2026 · analysis from 1 Jun 2026
JNJ· Healthcare
Johnson & Johnson
Johnson & Johnson is a fortress of a healthcare business, but at a 26.9 times earnings you are paying a king's ransom for it.
Buffett fit
Partial fit
Owner
79
Durability
53
Management
80
Price
28
Score updated 21 Oct 2026 · analysis from 1 Jun 2026
Buffett's checklist
Each number against Buffett's bar, and where it ranks among Healthcare stocks in our database.
How much profit the business makes on each dollar invested in it. Higher is better.
What is left of each sale after the cost of making the product. A high number often means pricing power.
The cash the business earns for its owners, compared with the price of the whole company.
How fast sales grew each year over the last five years.
How many years of today's profit you pay for at today's price. Lower means cheaper.
How much the company owes compared with what it owns outright. Lower is safer.
The four pillars
How the business measures up on each of Buffett's four tests.
If I owned the whole company I would sleep well at night on the operations and poorly on the price.
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The durability score of 53 is the honest blemish here. Pharma is a business of patent cliffs and lawsuits, and the worst earnings drop on record was a brutal 58 percent, which is not the smooth river you want under a long hold.
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Management here has earned its 80. They run the balance sheet with only 0.22 in and actually sit on net cash, with net debt to EBITDA of negative 0.13, and they have steadily retired about 2 percent of the shares each year.
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Here is where I put my pencil down. An owner-earnings yield of just 3.53 percent and a price of 26.9 times earnings give you almost no cushion, and an EV to of 21.6 confirms the market has already priced in years of good behavior.
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For and against
The strongest points on each side, with the numbers behind them.
In its favor
6- 1Fat 69.1 percent and a 26.9 percent show genuine , not commodity economics.
- 2Fortress balance sheet with of just 0.22 and net cash on hand, net debt to EBITDA of negative 0.13.
- 3Interest coverage near 32 times means debt service is a rounding error against earnings.
- 4Five-year around 21 percent proves the business reinvests at attractive rates.
Concerns
6- 1Valuation is steep: 26.9 times earnings and an owner-earnings yield of only 3.53 percent leave no .
- 2EV to of 21.6 means even on an enterprise basis you are paying a premium multiple for mid-single-digit growth.
- 3Durability score of just 53, dragged down by a worst-case earnings decline of 58 percent, reflects patent and litigation risk.
- 4Return on capital fell from a five-year 21 percent to 13.6 percent in the trailing year, a meaningful step down.
Price history
$259+58.4%· 5-year return
Weekly closing prices. Touch or hover the line for a date.
The business
How the business works
Johnson & Johnson sells pharmaceuticals and medical devices, and it does so at a 69.1 percent and a 26.9 percent , which tells you the products carry real and the brands do the selling. Revenue has compounded at a modest 4.6 percent a year while earnings per share grew 8.6 percent, the gap coming from that shrank the share count about 2 percent annually. This is a business that grinds out cash year after year rather than one that shoots the lights out.
How this analysis has moved
The call has held across 5 reviews.
Sep 27, 2026 → Oct 21, 2026
What other investors would say
The same company, judged by three other documented playbooks.
Keep researching
Similar companies in Healthcare
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