Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Johnson & Johnson's cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 6.8% to 6.2% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 75, DPO 152, DIO 167). At a 7.5% WACC with mid-year discounting, the terminal value (81% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 14.8x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $205.91 per share, suggesting JNJ is fairly valued by 14.5% at the current price of $240.76.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 26,972 | 28,600 | 30,332 | 32,143 | 34,149 | 35,003 |
| (−) Net Interest | 677 | 718 | 762 | 807 | 857 | 879 |
| (+) D&A | 4,292 | 4,572 | 4,841 | 5,069 | 5,388 | 5,522 |
| EBITDA | 31,941 | 33,890 | 35,934 | 38,019 | 40,394 | 41,404 |
| (−) Tax | 3,646 | 3,866 | 4,100 | 4,345 | 4,616 | — |
| (−) CapEx | 5,051 | 5,356 | 5,680 | 6,019 | 6,395 | — |
| (−) ΔWC | 2,539 | 1,323 | 1,407 | 1,472 | 1,630 | — |
| Free Cash Flow (FCF) | 20,705 | 23,345 | 24,747 | 26,183 | 27,753 | — |
| Peers' EBITDA Multiple | 14.8x | |||||
| Terminal Value | 611,951 | |||||
| WACC / Discount Rate | 7.48% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 19,971 | 20,950 | 20,663 | 20,339 | 20,059 | 426,616 |
| Enterprise Value | 528,598 | |||||
| Projection Period | 101,982 | 19.3% | ||||
| Terminal Value | 426,616 | 80.7% | ||||
| (−) Current Net Debt | 28,224 | |||||
| Equity Value | 500,374 | |||||
| (÷) Outstanding Shares | 2429M | |||||
| Fair Price | $206 | -14.5% | ||||
| WACC \ EV/EBITDA Exit Multiple | 10.8x | 12.8x | 14.8x | 16.8x | 18.8x |
|---|---|---|---|---|---|
| 5.5% | $173 | $199 | $225 | $251 | $277 |
| 6.5% | $166 | $190 | $215 | $240 | $265 |
| 7.5% | $158 | $182 | $206 | $230 | $253 |
| 8.5% | $152 | $174 | $197 | $220 | $242 |
| 9.5% | $145 | $167 | $189 | $210 | $232 |
Current price: $240.76. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.