WallStSmart

Johnson & Johnson (JNJ)vsMerck & Company Inc (MRK)

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Smart Verdict

WallStSmart Research — data-driven comparison

Johnson & Johnson generates 47% more annual revenue ($99.33B vs $67.38B). JNJ leads profitability with a 16.2% profit margin vs 3.6%. MRK appears more attractively valued with a PEG of 2.82. JNJ earns a higher WallStSmart Score of 54/100 (C-).

JNJ

Buy

54

out of 100

Grade: C-

Growth: 4.7Profit: 8.5Value: 2.7Quality: 5.5
Piotroski: 3/9Altman Z: 2.64

MRK

Hold

44

out of 100

Grade: D

Growth: 3.3Profit: 6.5Value: 2.0Quality: 5.0
Piotroski: 3/9Altman Z: 2.27
IV

Intrinsic Value Comparison

Multi-model valuation · Graham Formula

JNJSignificantly Overvalued (-89.3%)

Margin of Safety

-89.3%

Fair Value

$144.28

Current Price

$266.19

$121.91 premium

UndervaluedFair: $144.28Overvalued
MRKSignificantly Overvalued (-76.6%)

Margin of Safety

-76.6%

Fair Value

$84.66

Current Price

$144.70

$60.04 premium

UndervaluedFair: $84.66Overvalued

Key Strengths & Concerns

Side-by-side fundamental analysis

Key Strengths

JNJ3 strengths · Avg: 8.7/10
Market CapQuality
$657.68B10/10

Mega-cap, among the largest globally

Operating MarginProfitability
25.7%8/10

Strong operational efficiency at 25.7%

Free Cash FlowQuality
$6.36B8/10

Generating 6.4B in free cash flow

MRK3 strengths · Avg: 9.3/10
Market CapQuality
$368.89B10/10

Mega-cap, among the largest globally

Operating MarginProfitability
41.2%10/10

Strong operational efficiency at 41.2%

Free Cash FlowQuality
$4.48B8/10

Generating 4.5B in free cash flow

Areas to Watch

JNJ4 concerns · Avg: 2.3/10
Piotroski F-ScoreQuality
3/93/10

Weak financial health signals

PEG RatioValuation
3.072/10

Expensive relative to growth rate

P/E RatioValuation
41.5x2/10

Premium valuation, high expectations priced in

EPS GrowthGrowth
-95.9%2/10

Earnings declined 95.9%

MRK4 concerns · Avg: 3.5/10
Price/BookValuation
8.5x4/10

Trading at 8.5x book value

Revenue GrowthGrowth
4.7%4/10

4.7% revenue growth

Return on EquityProfitability
7.6%3/10

ROE of 7.6% — below average capital efficiency

Profit MarginProfitability
3.6%3/10

3.6% margin — thin

Comparative Analysis Report

WallStSmart Research

Bull Case : JNJ

The strongest argument for JNJ centers on Market Cap, Operating Margin, Free Cash Flow. Profitability is solid with margins at 16.2% and operating margin at 25.7%.

Bull Case : MRK

The strongest argument for MRK centers on Market Cap, Operating Margin, Free Cash Flow.

Bear Case : JNJ

The primary concerns for JNJ are Piotroski F-Score, PEG Ratio, P/E Ratio. A P/E of 41.5x leaves little room for execution misses.

Bear Case : MRK

The primary concerns for MRK are Price/Book, Revenue Growth, Return on Equity. A P/E of 151.0x leaves little room for execution misses. Thin 3.6% margins leave little buffer for downturns.

Key Dynamics to Monitor

JNJ profiles as a mature stock while MRK is a value play — different risk/reward profiles.

MRK carries more volatility with a beta of 0.22 — expect wider price swings.

JNJ is growing revenue faster at 5.9% — sustainability is the question.

JNJ generates stronger free cash flow (6.4B), providing more financial flexibility.

Bottom Line

JNJ scores higher overall (54/100 vs 44/100), backed by strong 16.2% margins. Both earn "Buy" and "Hold" ratings respectively — the choice depends on your investment horizon and risk tolerance.

This analysis is generated from publicly available financial data. Not financial advice.

Johnson & Johnson

HEALTHCARE · DRUG MANUFACTURERS - GENERAL · USA

Johnson & Johnson (J&J) is an American multinational corporation founded in 1886 that develops medical devices, pharmaceuticals, and consumer packaged goods. Its common stock is a component of the Dow Jones Industrial Average and the company is ranked No. 36 on the 2021 Fortune 500 list of the largest United States corporations by total revenue. Johnson & Johnson is one of the world's most valuable companies, and is one of only two U.S.-based companies that has a prime credit rating of AAA, higher than that of the United States government.

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Merck & Company Inc

HEALTHCARE · DRUG MANUFACTURERS - GENERAL · USA

Merck & Co. is an American multinational pharmaceutical company headquartered in Kenilworth, New Jersey. It is named after the Merck family, which set up Merck Group in Germany in 1668.

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