Archer-Daniels-Midland Company (ADM) vs Johnson & Johnson (JNJ): Which Is the Better Buy in 2026?
As of 2026-06-19, ADM is overvalued at $75, with a DCF intrinsic value of $42 and a margin of safety of -80%. JNJ is fairly valued at $228, with an intrinsic value of $281 and a margin of safety of 19%. Of the two, JNJ has the wider margin of safety.
Rewards
- ★Free cash flow has grown at a 24.9% CAGR over the past 4 years, demonstrating strong earnings power growth.
- ★Share count has been reduced by 12% over the past 4 years through buybacks, increasing each share's claim on earnings.
- ★FCF yield of 11.6% is historically attractive — the business generates significant cash relative to its price.
- ★Johnson & Johnson has maintained ROIC above 15% for 4 consecutive years, indicating a durable competitive advantage.
- ★Gross margin of 68.0% indicates strong pricing power — typical of businesses with significant intellectual property or brand strength.
- ★Johnson & Johnson scores 90/100 on the Economic Moat Score (Wide Moat), with revenue predictability as the strongest competitive dimension.
Risks
- ⚠ROIC has declined by 6.4 percentage points over the past 4 years, which may signal competitive erosion.
- ⚠Gross margin of 6.3% is low, suggesting a competitive or commodity-like market with limited pricing power.
- ⚠Trailing P/E of 33.5x is 117% above the historical average of 15.5x — the stock trades at a premium to its own history.
- ⚠Trailing P/E of 26.5x is 33% above the historical average of 20.0x — the stock trades at a premium to its own history.
- ⚠PEG ratio of 3.06 indicates the stock is expensive relative to its expected growth — the market may be pricing in more growth than analysts project.
- ⚠Insiders have sold $2.4M worth of stock in the past 3 months — significant insider liquidation.
Key Valuation Metrics
Learn more →Historical Fundamentals
Learn more →Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation. The dashed forward point is the forward P/E — today's price ÷ analyst consensus EPS.
Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation. The dashed forward point is the forward P/E — today's price ÷ analyst consensus EPS.
Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation. The dashed forward point is the forward P/E — today's price ÷ analyst consensus EPS.
$1 Retained Earnings Test
Learn more →> $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer
> $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer
Buffett's "$1 Test": For every $1 of earnings retained, has management created at least $1 of market value?
> $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer
Discounted Cash Flow (DCF) Analysis
Learn more →Reverse DCF — Market-Implied Growth
Learn more →What growth rate is the market pricing in at $75?
The market implies +18.1% Owner Earnings growth, above historical trends.
Standard FCF implies a demanding -0.5%, reflecting heavy growth investment.
What growth rate is the market pricing in at $228?
The market implies +7.7% Owner Earnings growth, above historical trends.
Standard FCF implies a demanding +13.3%, reflecting heavy growth investment.
Economic Moat Score
Learn more →Narrow moat with revenue predictability as the key competitive advantage. Improving roic consistency would strengthen the moat.
Wide moat with strength across all dimensions. Revenue Predictability is the standout factor.
Forensic Accounting
Learn more →M-Score Trend
M-Score Trend
Beneish's 8-variable model estimates the probability of earnings manipulation. An M-Score above -1.78 signals elevated risk — companies in this range have historically been 3-5× more likely to be manipulating earnings. Scores between -2.22 and -1.78 fall in a grey zone warranting further investigation.
Ownership Breakdown
Learn more →High insider ownership aligns management incentives with shareholders. Institutional concentration can indicate smart-money conviction but also crowding risk.
Insider Buying Activity
Learn more →Open market purchases · includes direct & indirect ownership · excludes option exercises.
Insider Selling Activity
Learn more →Direct ownership only · excludes indirect, option exercises, planned (10b5-1) sales & derivatives.
🎭 Mr. Market's Mood
Learn more →"Market is pricing this stock without strong emotion in either direction"
"Market is optimistic — be cautious and ensure you have a margin of safety"
Composite sentiment score based on market signals. Inspired by Buffett’s "Mr. Market" allegory — fear = potential opportunity, greed = potential risk. Must be used alongside fundamental analysis, not in isolation.
⚖️ Buffett Signal
Learn more →The Buffett Signal cross-references market sentiment with DCF valuation. Configure the DCF Analysis above to generate a signal.
The Buffett Signal cross-references market sentiment with DCF valuation. Configure the DCF Analysis above to generate a signal.
Frequently Asked Questions: ADM vs JNJ
Is Archer-Daniels-Midland Company or Johnson & Johnson more undervalued in 2026?▼
Based on our discounted cash flow model, JNJ trades at a 18.6% margin of safety (intrinsic value $281 vs. price $228), compared to ADM's -79.8% margin of safety (intrinsic $42 vs. $75).
Which stock has a wider economic moat, Archer-Daniels-Midland Company or Johnson & Johnson?▼
JNJ scores 90/100 (Wide moat), while ADM scores 44/100 (Narrow moat). The moat score measures competitive advantage durability across ROIC consistency, margin stability, revenue predictability, and reinvestment efficiency.
Is Archer-Daniels-Midland Company in financial distress?▼
ADM's Altman Z-Score of 2.9 places it in the Grey zone, signaling elevated bankruptcy risk. JNJ scores 3.5 (Safe zone). The Altman Z-Score is a five-factor model that predicts insolvency within two years; scores below 1.81 indicate significant distress.
Which company has better free cash flow, Archer-Daniels-Midland Company or Johnson & Johnson?▼
Archer-Daniels-Midland Company (ADM) generates a 11.6% free cash flow yield, compared to Johnson & Johnson's 3.5%. A higher FCF yield means the business converts more of its market value into cash that can be returned to shareholders or reinvested.
Which stock has higher return on invested capital, Archer-Daniels-Midland Company or Johnson & Johnson?▼
JNJ earns 15.3% ROIC versus ADM's 2.4%. A higher ROIC means the company generates more profit per dollar of capital employed, a hallmark of durable competitive advantage in Buffett-style analysis.
Which dividend is safer, Archer-Daniels-Midland Company's or Johnson & Johnson's?▼
JNJ's dividend earns a safety score of 79/100 (Safe), compared to ADM's 55/100 (Borderline). JNJ has raised its dividend for 3 consecutive years.