Johnson & Johnson's management score of 99 reflects a return on invested capital of 13.7 percent alongside a gross margin of 72.8 percent and debt to equity of just 0.6x, a combination that points to a business generating strong returns without leaning heavily on borrowed money. The moat score of 53 is more middling, suggesting the competitive position, while real, is not judged to be as dominant as the capital efficiency numbers alone might imply.
The gap shows up in price. At $259.80, shares trade well above the consensus buy price of $82.81, which itself averages a 10-cap price of $82.81 and a payback time price of $74.71. The margin of safety score of 4 out of 100 captures how thin that cushion is. This valuation rests on a growth rate of 2.7 percent, deliberately held below the 3.0 percent measured from the company's own history as a conservative choice.
The tension is that a highly efficient balance sheet and return profile sit next to a price that, at 30.1 times earnings and a free cash flow yield of 3.9 percent, leaves little room for error against even that conservative assumption.
| Price | $269.99 |
| Market cap | $650.6B |
| P/E ratio | 31.3x |
| Return on invested capital | 13.7% |
| Gross margin | 67.9% |
| Debt to equity | 0.59x |
| Free cash flow yield | 3.9% |
| Growth rate used | 2.7% |
| Growth rate measured | 3.0% |
| Exit multiple assumed | 8.0x |
| Company | Moat | Mgmt | Margin of safety |
|---|---|---|---|
| Eli Lilly and Company (LLY) | 85 | 84 | 39 |
Every number above is built on assumptions that can be changed. In Moatly you can move the growth rate, the exit multiple and the margin of safety and watch every figure recalculate, so you are testing your own view of Johnson & Johnson rather than accepting ours.