Value
4.5/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 4.6 |
| P/S | 6.2 |
| EV/EBITDA | 1.3 |
| Fwd P/E | 6.8 |
| PEG | 3.6 |
| Analyst target | 4.0 |
- ▸Forward P/E: 18.8x
- ▸PEG: 3.11
JNJ · Why this verdict
Why Johnson & Johnson (JNJ) is rated HOLD
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictHOLD
Overall score5.3/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
A high-quality healthcare franchise with strong margins, a wide economic moat, and strong price momentum has already surpassed its near-term resistance target, leaving the risk/reward unfavorable for new exposure; the setup favors holding an existing position while monitoring the dividend sustainability concern and the most recent earnings miss.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The business sustains strong margins (22%), a return on equity of 26%, and a wide economic moat — a combination indicating durable competitive positioning. A Piotroski score of 7 out of 9 confirms broad financial health. Quality breakdown | Margins remain at or above current levels over the next four quarters as the competitive position is maintained. | →Stable |
| CounterFree cash flow converts at only 59% of reported earnings, a concern the quality data explicitly flags; the gap between reported profitability and cash generation means the stated margins may overstate real cash returns, and if FCF conversion continues to lag, the quality franchise story becomes harder to sustain. | ||
The technical configuration shows a golden cross, price trading above all major moving averages, an RSI of 58, and a bullish MACD — collectively consistent with a sustained breakout pattern driven by institutional buying accumulation. Engine gate (passed) | Price holds above its 200-day moving average and volume accumulation continues over the next 12 months. | →Stable |
| CounterThe stock is already trading above its near-term resistance target, and the risk/reward is unfavorable at current levels; momentum that has already run past the target may lose its catalyst and consolidate or retrace as near-term buyers take profits. | ||
The dividend is flagged as a potential yield trap — a situation where a high stated yield may prove difficult to sustain if earnings or cash flows deteriorate, posing a risk to income-focused holders. Catalyst breakdown | If this risk materializes, the dividend would be reduced or covered less comfortably, weakening the income case for holding. | →Stable |
| CounterThe wide economic moat and Piotroski score of 7 out of 9 indicate the underlying franchise has financial durability; if cash conversion improves from 59% of reported earnings, the dividend may prove better-supported than the current yield-trap flag suggests. | ||
Earnings estimates are trending upward, providing a positive revision tailwind that can sustain the current valuation even as trailing growth remains soft. Bull case | Consensus EPS estimates continue rising over the next four quarters, validating the upward revision trend. | →Stable |
| CounterThe most recent quarter delivered a miss of -5.86%, preceded by an inline result; two consecutive shortfalls against consensus could stall or reverse the estimate revision cycle that the upward trend depends on. | ||
The business sustains strong margins (22%), a return on equity of 26%, and a wide economic moat — a combination indicating durable competitive positioning. A Piotroski score of 7 out of 9 confirms broad financial health.
→StableQuality breakdown
- Expectation
- Margins remain at or above current levels over the next four quarters as the competitive position is maintained.
CounterFree cash flow converts at only 59% of reported earnings, a concern the quality data explicitly flags; the gap between reported profitability and cash generation means the stated margins may overstate real cash returns, and if FCF conversion continues to lag, the quality franchise story becomes harder to sustain.
The technical configuration shows a golden cross, price trading above all major moving averages, an RSI of 58, and a bullish MACD — collectively consistent with a sustained breakout pattern driven by institutional buying accumulation.
→StableEngine gate (passed)
- Expectation
- Price holds above its 200-day moving average and volume accumulation continues over the next 12 months.
CounterThe stock is already trading above its near-term resistance target, and the risk/reward is unfavorable at current levels; momentum that has already run past the target may lose its catalyst and consolidate or retrace as near-term buyers take profits.
The dividend is flagged as a potential yield trap — a situation where a high stated yield may prove difficult to sustain if earnings or cash flows deteriorate, posing a risk to income-focused holders.
→StableCatalyst breakdown
- Expectation
- If this risk materializes, the dividend would be reduced or covered less comfortably, weakening the income case for holding.
CounterThe wide economic moat and Piotroski score of 7 out of 9 indicate the underlying franchise has financial durability; if cash conversion improves from 59% of reported earnings, the dividend may prove better-supported than the current yield-trap flag suggests.
Earnings estimates are trending upward, providing a positive revision tailwind that can sustain the current valuation even as trailing growth remains soft.
→StableBull case
- Expectation
- Consensus EPS estimates continue rising over the next four quarters, validating the upward revision trend.
CounterThe most recent quarter delivered a miss of -5.86%, preceded by an inline result; two consecutive shortfalls against consensus could stall or reverse the estimate revision cycle that the upward trend depends on.
Per-dimension breakdown
Quality
7.1/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 8.8 |
| ROA | 5.6 |
| Gross margin | 9.6 |
| Op margin | 10.0 |
| Net margin | 10.0 |
| Current ratio | 4.1 |
| FCF quality | 4.6 |
| Moat | 7.6 |
| Rule of 40 | 3.0 |
| Piotroski F | 7.8 |
- ▸Excellent ROE: 26%
- ▸Strong margins: 22%
- ▸Earnings quality warning: 59% FCF/NI
- ▸Wide economic moat
Growth
2.5/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 5.0 |
| EPS growth | 0.0 |
Momentum
7.3/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.5 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 9.0 |
| Volume | 3.0 |
- ▸Overbought (RSI 70)
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
6.2/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 5.0 |
| Analyst rating | 7.5 |
| Price target | 6.0 |
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.1 |
- ▸Negligible insider selling — $2,411,500 (0.000% of mkt cap)
Peer rank
4.7/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 1.6 |
| quality rank | 5.4 |
| growth rank | 6.9 |
Technical
3.9/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 1.4 |
| support resistance | 0.9 |
| 52w position | 9.3 |
Risk (lower is worse)
8.1/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 9.5 |
| days to cover | 7.7 |
| volatility | 6.9 |
| put call | 8.5 |
| implied vol | 6.9 |
| beta | 10.0 |
| debt equity | 6.9 |
Catalyst
6.1/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 6.5 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 3.2 |
| dividend safety | 4.2 |
| news activity | 8.0 |
- ▸Strong earnings: 3B/0M
- ▸Yield trap warning: high yield but unsafe
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position. | News modifier +1 (SELL_IF_HOLDING → HOLD_IF_HOLDING).
Engine technical detail
verdict_path:
L4:PATH_F_SELL|L3:NEWS_MOD=+1Passed (6)
- MOMENTUM:7.3>=5.5
- INSIDER:OK
- 8K:CLEAN
- EARNINGS_PROXIMITY:21d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-0.5=NEGATIVE
Warning (0)
none
Reward-to-Risk
-0.47
Upside
-3.9%
Downside
8.4%
Sizing output
AVOID
SetupUNKNOWN — No clear chart pattern; technical signals are mixed
EdgeCATALYST — Earnings in 21d with 3/4 beat streak
SuitabilityMODERATE — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 5.3 below the 5.4 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Risk (lower is worse) at 8.1) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:-0.5=NEGATIVE) reinforce the read. Current asymmetry R:R is -0.47 — supplementary context, not the trigger for this path.
The strongest dimensions are Risk (lower is worse) at 8.1, Momentum at 7.3, and Quality at 7.1; the weakest are Growth at 2.5, Technical at 3.9, and Value at 4.5. The V9 engine flagged 1 failed gate, producing an asymmetric reward-to-risk of -0.47 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1The business sustains strong margins (22%), a return on equity of 26%, and a wide economic moat — a combination indicating durable competitive positioning. A Piotroski score of 7 out of 9 confirms broad financial health.
Trip ifMargins fall below 15% for 2 consecutive quarters.
- P2The technical configuration shows a golden cross, price trading above all major moving averages, an RSI of 58, and a bullish MACD — collectively consistent with a sustained breakout pattern driven by institutional buying accumulation.
Trip ifRSI falls below 40 for 2 consecutive weeks.
- P3The dividend is flagged as a potential yield trap — a situation where a high stated yield may prove difficult to sustain if earnings or cash flows deteriorate, posing a risk to income-focused holders.
Trip ifFCF as a percentage of net income rises above 80% for 2 consecutive quarters.
- P4Earnings estimates are trending upward, providing a positive revision tailwind that can sustain the current valuation even as trailing growth remains soft.
Trip ifEPS surprise stays below 0% for 2 consecutive quarters.