Is Johnson & Johnson overvalued or undervalued?

As of 16 July 2025, the valuation grade for Johnson & Johnson has moved from very attractive to attractive, indicating a shift in perceived value. The company is currently considered fairly valued. Key valuation ratios include a P/E ratio of 23, an EV to EBITDA of 16.16, and a Price to Book Value of 5.74. In comparison, Eli Lilly & Co. has a higher P/E of 40.89, while Merck & Co., Inc. shows a more attractive P/E of 15.68.
Despite the recent downgrade in valuation, Johnson & Johnson has outperformed the S&P 500 year-to-date with a return of 20.43% compared to the index's 12.22%. However, over longer periods, such as the 3-year and 5-year returns, the company has lagged behind the S&P 500, with returns of 3.91% and 16.74% respectively, compared to the index's 70.41% and 96.61%.