Sifting through countless of stocks in the Pharmaceuticals industry can be tedious, and sometimes two stocks are just too similar to judge which is the better investment. If you’re on the fence about investing in Johnson & Johnson or Bayer AG (ADR) because you’re not sure how they measure up, it’s important to compare them on a few factors before making your decision.

Read on to learn how Johnson & Johnson and Bayer AG (ADR) compare based on key financial metrics to determine which better meets your investment needs.

About Johnson & Johnson and Bayer AG (ADR)

Johnson & Johnson, through its subsidiaries, is engaged in the research and development, manufacture, and sale of a range of products in the healthcare field. The Company’s primary focus is products related to human health and well-being. It operates through two segments: Innovative Medicine and MedTech. The Innovative Medicine segment is focused on various therapeutic areas, including immunology, infectious diseases, neuroscience, oncology, pulmonary hypertension, and cardiovascular and metabolic diseases. Products in this segment are distributed directly to retailers, wholesalers, distributors, hospitals, and healthcare professionals for prescription use. The MedTech segment includes a broad portfolio of products used in the orthopedic, surgery, interventional solutions, and vision fields. These products are distributed to wholesalers, hospitals, and retailers, and used principally in the professional fields by physicians, nurses, hospitals, eye care professionals and clinics.

Bayer AG is a German-based life science company. The Company's segments are Crop Science, Pharmaceuticals and Consumer Health. The Crop Science segment focuses on seeds, improved plant traits, chemical and biological crop protection products, digital solutions and customer service for sustainable agriculture. The Pharmaceuticals segment focuses on prescription products, especially for cardiology and women's healthcare and specialty therapeutics focused on the areas of cardiology, oncology, hematology and ophthalmology, as well as gene therapy and others. The Consumer Health segment develops, produces and markets nonprescription over-the-counter medicines for self-medication. Its Consumer Health segment portfolio consists of products in dermatology, dietary supplement, analgesic, gastrointestinal, cold, allergy, sinus and flu, foot care and sun protection categories, among others.

Latest Pharmaceuticals and Johnson & Johnson, Bayer AG (ADR) Stock News

As of May 3, 2024, Johnson & Johnson had a $361.3 billion market capitalization, compared to the Pharmaceuticals median of $103.3 million. Johnson & Johnson’s stock is NA in 2024, NA in the previous five trading days and down 8.35% in the past year.

Currently, Johnson & Johnson’s price-earnings ratio is 21.9. Johnson & Johnson’s trailing 12-month revenue is $85.6 billion with a % net profit margin. Year-over-year quarterly sales growth most recently was 2.3%. Analysts expect adjusted earnings to reach $10.649 per share for the current fiscal year. Johnson & Johnson currently has a 3.3% dividend yield.

Currently, Bayer AG (ADR) does not have a price-earnings ratio. Bayer AG (ADR)’s trailing 12-month revenue is $51.1 billion with a -6.2% net profit margin. Year-over-year quarterly sales growth most recently was -1.1%. Analysts expect adjusted earnings to reach $1.380 per share for the current fiscal year. Bayer AG (ADR) currently has a 0.4% dividend yield.

How We Compare Johnson & Johnson and Bayer AG (ADR) Stock Grades

Stock evaluation requires access to huge amounts of data and the knowledge and time to sift through it all, make sense of financial ratios, read income statements and analyze recent stock movements. AAII created A+ Investor, a robust data suite that condenses data research in an actionable and customizable way suitable for investors of all knowledge levels, to help investors streamline and work through such data.

AAII’s proprietary stock grades come with A+ Investor. These offer intuitive A‐F grades for each of five key investing factors: value, growth, momentum, earnings estimate revisions and quality. Here, we’ll take a closer look at Johnson & Johnson and Bayer AG (ADR)’s stock grades to see how they measure up against one another.

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Johnson & Johnson and Bayer AG (ADR) Stock Value Grades

Company	Ticker	Value
Johnson & Johnson	JNJ	D
Bayer AG (ADR)	BAYRY	A

Successful stock investing involves buying low and selling high, so stock valuation is an important consideration for stock selection.

Buying stocks that are going to go up typically means buying stocks that are undervalued in the first place, although momentum investors may argue that point.

AAII’s A+ Investor Value Grade derives from a stock’s value score. The Value Score is the percentile rank of the average of the percentile ranks of the price-to-sales ratio, price-earnings ratio, enterprise-value-to-EBITDA (EV/EBITDA) ratio, shareholder yield, price-to-book-value ratio and price-to-free-cash-flow ratio. The score is variable, meaning it can consider all six ratios or, should any of the six ratios not be valid, the remaining ratios that are valid. To be assigned a Value Score, stocks must have a valid (non-null) ratio and corresponding ranking for at least two of the six valuation ratios.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are a good value and so on.

Johnson & Johnson has a Value Score of 35, which is Expensive. Bayer AG (ADR) has a Value Score of 88, which is Deep Value.

The Value Stock Winner: Bayer AG (ADR)

As you can clearly see from the Value Grade breakdown above, Bayer AG (ADR) is considered to have better value than Johnson & Johnson. For investors who focus solely on a company’s valuation, Bayer AG (ADR) could be a good stock to add to their portfolio. However, it’s important for investors to analyze multiple factors based on a wide range of metrics before deciding whether to buy.

Johnson & Johnson and Bayer AG (ADR)’s Quality Grades

Company	Ticker	Quality
Johnson & Johnson	JNJ	A
Bayer AG (ADR)	BAYRY	B

Like the Value Grade, AAII’s A+ Investor Quality Grade comes from the percentile rank of key metrics. Specifically, the Quality Score is the percentile rank of the average of the percentile ranks of return on assets (ROA), return on invested capital (ROIC), gross profit relative to assets, buyback yield, change in total liabilities to assets, accruals, Z double prime bankruptcy risk (Z) score and the F-Score.

The score is variable, meaning it can consider all eight measures or, should any of the eight measures not be valid, the remaining measures that are valid. To be assigned a Quality Score, stocks must have a valid (non-null) measure and corresponding ranking for at least four of the eight quality measures.

The Quality Score is used to assess the underlying “quality” of a particular stock. A higher-quality stock possesses traits associated with upside potential and reduced downside risk. Backtesting of the Quality Grade shows that stocks with higher grades, on average, outperformed stocks with lower grades over the period of 1998 through 2019.

Stocks receive better grades (higher scores) for having higher scores for the quality subcomponents and worse grades (lower scores) for lower scores for the subcomponents.

Johnson & Johnson has a Quality Score of 97, which is Very Strong. Bayer AG (ADR) has a Quality Score of 66, which is Strong.

The Quality Grade Winner: Johnson & Johnson

As you can clearly see from the Quality Grade breakdown above, Johnson & Johnson has a better overall quality grade than Bayer AG (ADR). For investors who are looking for companies with higher quality than others in the same industry, Johnson & Johnson could be a good stock to add to their portfolios. However, it’s important for investors to analyze multiple factors based on a wide range of metrics before deciding whether to buy.

Johnson & Johnson and Bayer AG (ADR)’s Estimate Revisions Grades

Company	Ticker	Earnings Estimate
Johnson & Johnson	JNJ	D
Bayer AG (ADR)	BAYRY	D

Earnings estimate revisions scores consider the magnitude of a company’s earnings surprise in its last two reported fiscal quarters. Often, positive surprises beget further positive surprises‐or at least continued sales growth (the exact opposite is generally true, too).

Estimate revisions offer an indication of what analysts are thinking about the short-term prospects of a firm. Estimate revisions are based on the statistical significance of a firm’s last two quarterly earnings surprises and the percentage change in its consensus estimate for the current fiscal year over the past month and past three months.

Johnson & Johnson has a Earnings Estimate Score of 31, which is Negative. Bayer AG (ADR) has a Earnings Estimate Score of 22, which is Negative.

The Earnings Estimate Revisions Stock Winner: No Clear Winner

Neither Johnson & Johnson or Bayer AG (ADR) has an Earnings Estimate Revisions Grade that could be considered a “winner.” Investors considering these companies should do additional due diligence and research to see if either could be a good addition to their portfolios. It’s important to look at a wide range of financial metrics in order to determine if Johnson & Johnson or Bayer AG (ADR) is the better investment when it comes to estimate revisions.

Other Johnson & Johnson and Bayer AG (ADR) Grades

In addition to Quality, Estimate Revisions and Value, A+ Investor also provides grades for Growth and Momentum.

Momentum grades help uncover stocks experiencing anomalously high rates of return; research finds that stocks with high relative levels of momentum tend to outperform, whereas those with low levels of momentum tend to continue underperforming.

Growth investing builds on the idea that stocks of companies exhibiting strong, consistent and prolonged growth outperform those of slower-growth companies. AAII measures growth through consistency of annual sales growth, five-year sales growth rankings adjusted for extreme levels, and consistency of positive annual cash from operations.

These 2 key factors, when combined with the above, provide a holistic view into a particular stock. Further, by joining A+ Investor you can see whether Johnson & Johnson and Bayer AG (ADR) pass any of our 60+ stock screens that have outperformed the market since their creation.

So, Which Is the Better Investment, Johnson & Johnson or Bayer AG (ADR) Stock?

Overall, Johnson & Johnson stock has a Value Score of 35, Estimate Revisions Score of 31 and Quality Score of 97.

Bayer AG (ADR) stock has a Value Score of 88, Estimate Revisions Score of 22 and Quality Score of 66.

Comparing Johnson & Johnson and Bayer AG (ADR)’s grades, scores and metrics can act as a solid basis to determine whether they may be a good investment or not. You’ll also want to look at your portfolio’s asset allocation as well as your risk tolerance and financial goals to see if either of these stocks would make a good fit for you. AAII can help you figure out which investments align with your individual needs and preferences.

Investors are encouraged to do their own due diligence and research. In this way, individuals can effectively become managers of their own assets‐without having to rely on others for financial independence. You can count on AAII for timeless articles on financial planning and stock-picking, unbiased research and actionable analysis.

A+ Investor adds to our qualitative teaching with a powerful data suite to help you whittle down investment choices to find stocks, exchange-traded funds (ETFs) or mutual funds that meet your needs.

AAII Disclaimer

We make no representations or warranties that any investor will, or is likely to, achieve profits similar to those shown, because past, hypothetical or simulated performance is not necessarily indicative of future results. Before making an investment decision, you should consider your circumstances and whether the information on our content is applicable to your situation. This information was prepared in good faith, and we accept no liability for any errors or omissions. The full disclaimer can be read here.