Pick Disney Over Johnson & Johnson Stock

Core Viewpoint - Disney stock (NYSE: DIS) is currently viewed as a better investment option compared to Johnson & Johnson stock (NYSE: JNJ) due to its attractive valuation and potential for growth despite recent performance challenges [1]. Group 1: Stock Performance Comparison - JNJ stock has gained 20% from $140 in early January 2021 to around $165, while DIS stock has declined 50% from $180 to $90 during the same period [2]. - Historical returns for JNJ were 11% in 2021, 6% in 2022, and -9% in 2023, whereas DIS returns were -15%, -44%, and 4% respectively [3]. Group 2: Revenue Growth Analysis - JNJ's adjusted revenue increased by 8% from $78.7 billion in 2021 to $85.2 billion in 2023, while Disney's sales rose 32% from $67.4 billion in fiscal 2021 to $88.9 billion in fiscal 2023 [4]. - JNJ's revenue growth was driven by pharmaceuticals and medical devices, with key products like Darzalex and Stelara contributing significantly [5]. - Disney's revenue growth was primarily fueled by its theme park business and a rebound in average spending post-COVID-19, although overall subscriber growth for its streaming services has slowed [6]. Group 3: Profitability Metrics - JNJ's operating margin improved from 26.6% in 2021 to 27.5% in 2023, while Disney's margin nearly doubled from 5.4% to 10.1% during the same period [8]. Group 4: Financial Risk Assessment - JNJ has a lower debt-to-equity ratio of 10% compared to Disney's 29%, and a higher cash-to-assets ratio of 14% versus Disney's 3%, indicating a stronger financial position for JNJ [9]. Group 5: Valuation Insights - JNJ's estimated valuation is $172 per share, slightly above its current market price of $166, trading at 17x forward expected earnings [10]. - Disney's estimated valuation is around $116 per share, approximately 30% above its current market price, trading at 18x forward expected adjusted earnings, suggesting significant growth potential [10].