Is Johnson & Johnson overvalued or undervalued?

As of 16 May 2025, the valuation grade for Johnson & Johnson has moved from attractive to very attractive, indicating a positive shift in its perceived value. The company is currently considered undervalued. Key ratios include a P/E ratio of 23, an EV to EBITDA of 16.16, and a return on equity (ROE) of 25.13%.
When compared to peers, Johnson & Johnson's P/E ratio is significantly lower than Eli Lilly & Co., which has a P/E of 48.73, and AbbVie, Inc. at 22.80, while Merck & Co., Inc. shows a more favorable P/E of 14.42. This suggests that Johnson & Johnson is positioned well within its industry. Additionally, its recent stock performance has been lagging behind the S&P 500 over the past year, which reinforces the notion that it may be undervalued relative to its potential.