Johnson & Johnson (JNJ) vs Merck & Co., Inc. (MRK)

Johnson & Johnson and Merck & Co., Inc. are both Drug Manufacturers General companies. Johnson & Johnson is the larger, with a market value of $652.8B against $365.4B — 1.8× the size. Johnson & Johnson trades at the lower P/E: 31.4× against 119×. Johnson & Johnson grew revenue faster over the last twelve months: 8.06% against 4.64%. Johnson & Johnson has the higher net margin (21.5% vs 4.77%) and the higher return on invested capital (15.5% vs 5.08%). Both pay a dividend; Johnson & Johnson yields more (3.07% vs 2.58%). Across the 23 metrics below, Johnson & Johnson leads on 14 and Merck & Co., Inc. on 9.

Valuation

Metric JNJ MRK Drug Manufacturers General median
P/E 31.43 119.02 24.72
P/S 6.67 5.52 3.35
P/B 7.68 8.75 5.00
Price to free cash flow 28.73 22.88 17.68
EV/EBITDA 19.20 30.03 13.91
EV/Sales 6.84 6.18 3.95
Earnings yield 3.18% 0.84% 2.92%
Free cash flow yield 3.48% 4.37% 4.42%

Profitability

Metric JNJ MRK Drug Manufacturers General median
Gross margin 67.91% 72.97% 72.77%
Operating margin 27.69% 10.49% 18.90%
Net margin 21.48% 4.77% 8.27%
Free cash flow margin 23.20% 24.13% 17.25%
Return on equity 25.74% 6.97% 6.97%
Return on assets 10.67% 2.57% 2.76%
Return on invested capital 15.51% 5.08% 6.30%

Growth

Metric JNJ MRK Drug Manufacturers General median
Revenue growth (TTM) 8.06% 4.64% 6.79%
EPS growth (last fiscal year) 90.50% 8.01% —
Revenue growth, 5-year CAGR 2.67% 9.38% 3.98%
Net income growth, 5-year CAGR 12.74% 20.90% 0.42%

Health

Metric JNJ MRK Drug Manufacturers General median
Debt to equity 0.44 1.22 0.63
Current ratio 1.09 1.32 1.32
Net debt to EBITDA 0.46 1.15 1.15

Dividend

Metric JNJ MRK Drug Manufacturers General median
Dividend yield 3.07% 2.58% 3.57%
Payout ratio 0.93 2.36 0.53

Size

Metric JNJ MRK Drug Manufacturers General median
Market cap 652.82b 365.36b 125.91b

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