Johnson Controls International plc (JCI) vs Johnson & Johnson (JNJ): Which Is the Better Buy in 2026?
As of 2026-06-19, JCI is undervalued at $145, with a DCF intrinsic value of $220 and a margin of safety of 34%. JNJ is fairly valued at $228, with an intrinsic value of $281 and a margin of safety of 19%. Of the two, JCI has the wider margin of safety.
Rewards
- ★Share count has been reduced by 11% over the past 4 years through buybacks, increasing each share's claim on earnings.
- ★Each dollar of retained earnings has created $5.60 of earning power — management is an exceptional capital allocator.
- ★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
- ⚠Trailing P/E of 44.3x is 69% above the historical average of 26.3x — the stock trades at a premium to its own history.
- ⚠Insiders have sold $13.4M worth of stock in the past 3 months — significant insider liquidation.
- ⚠Free cash flow has declined at a 13.7% CAGR over the past 4 years — a concerning trend.
- ⚠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 $145?
The market implies +11.3% Owner Earnings growth, below historical trends — potential opportunity.
Standard FCF implies a more demanding +14.9%, reflecting heavy growth investment expected to generate future returns.
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 optimistic — be cautious and ensure you have a margin of safety"
"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: JCI vs JNJ
Is Johnson Controls International plc or Johnson & Johnson more undervalued in 2026?▼
Based on our discounted cash flow model, JCI trades at a 34.1% margin of safety (intrinsic value $220 vs. price $145), compared to JNJ's 18.6% margin of safety (intrinsic $281 vs. $228).
Which stock has a wider economic moat, Johnson Controls International plc or Johnson & Johnson?▼
JNJ scores 90/100 (Wide moat), while JCI scores 67/100 (Narrow moat). The moat score measures competitive advantage durability across ROIC consistency, margin stability, revenue predictability, and reinvestment efficiency.
Is Johnson Controls International plc in financial distress?▼
JCI's Altman Z-Score of 2.6 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, Johnson Controls International plc or Johnson & Johnson?▼
Johnson & Johnson (JNJ) generates a 3.5% free cash flow yield, compared to Johnson Controls International plc's 3.2%. 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, Johnson Controls International plc or Johnson & Johnson?▼
JNJ earns 15.3% ROIC versus JCI's 11.7%. 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, Johnson Controls International plc's or Johnson & Johnson's?▼
JNJ's dividend earns a safety score of 79/100 (Safe), compared to JCI's 64/100 (Safe). JNJ has raised its dividend for 3 consecutive years.