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UNH offers a cheaper valuation and higher dividend yield, while JNJ boasts stronger returns.
Healthcare giants UnitedHealth Group (UNH - Free Report) ) and Johnson & Johnson (JNJ - Free Report) ) reported Q3 results on Tuesday, with both raising their full-year earnings outlooks but delivering contrasting reports.
While UnitedHealth's stronger-than-expected results highlighted improving medical cost management and a potential earnings recovery, Johnson & Johnson's growth in pharmaceuticals was tempered by weakness in its medical technology business.
With both healthcare leaders offering attractive dividend income, let's examine which stock presents the better investment opportunity following Q3 earnings.
UnitedHealth's Q3 Earnings Signal a Recovery
UnitedHealth reported adjusted Q3 earnings of $4.69 per share, beating the Zacks Consensus Estimate of $4.12 by nearly 14% and jumping 60% from EPS of $2.92 a year ago. Revenue reached $112.69 billion, exceeding expectations by 1% despite dipping from $113.16 billion in the prior-year quarter.
Encouragingly, UnitedHealth's medical cost ratio improved to 88.4% from 89.9% a year earlier, reflecting stronger medical cost management and pricing discipline that helped drive its impressive earnings growth.
Management raised its full-year adjusted EPS outlook to at least $20.50, representing 25% year-over-year growth and reinforcing optimism about improving profitability. Most importantly, the updated EPS guidance came in above Wall Street’s forecast of $19.85 per share.
This comes despite ongoing Medicare Advantage reimbursement pressures and challenges within its Optum business, which provides pharmacy benefits, healthcare services, and technology solutions.
Image Source: Zacks Investment Research
Johnson & Johnson's Q3 Results Highlight Mixed Momentum
Johnson & Johnson posted adjusted Q3 earnings of $2.59 per share, topping the Zacks EPS Consensus of $2.53 by 2%. That said, earnings declined 7.5% YoY, while revenue increased 6% to $25.4 billion, but narrowly missed estimates.
The company's Innovative Medicine division remained a bright spot, with sales climbing 7.7%, supported by strong demand for key pharmaceutical products. However, J&J's MedTech division, which specializes in cardiovascular devices, orthopedic implants, surgical equipment, and vision care products, saw revenue increase just 2.5% to $8.64 billion, falling short of expectations.
Despite these challenges, J&J raised its 2026 adjusted EPS guidance to $11.05-$11.15, up from its prior outlook of $10.96-$11.11 and representing more than 2% annual growth. Additionally, J&J expects annual revenue to reach $101.2 billion, representing 7% YoY growth.
Still, the updated EPS outlook came in slightly below the Street’s current forecast of $11.16.
Image Source: Zacks Investment Research
Performance & Valuation Comparison
Johnson & Johnson has been the stronger performer in 2026, with shares up more than 20% year-to-date when including dividends compared with UnitedHealth's roughly 17% advance.
Over the last three years, JNJ’s total return of 70% has trailed the broader market but has significantly outpaced the Zacks Medical Sector’s 9% gain. Meanwhile, UNH is still down 25% in the last three years, amid elevated medical costs, regulatory and policy headwinds, margin compression, and concerns over future profitability.
Image Source: Zacks Investment Research
However, UnitedHealth offers a more appealing valuation, with UNH trading around 19X forward earnings, compared with JNJ's 23X. Both stocks trade at discounts to the Zacks Medical Sector’s 25X, but UNH certainly offers greater value, especially if its earnings recovery continues.
Image Source: Zacks Investment Research
Dividend Comparison
UnitedHealth currently pays a quarterly dividend of $2.32 per share, representing an annualized payout of $9.28 and a yield of approximately 2.45%.
Johnson & Johnson offers an annualized dividend of $5.36 per share, yielding roughly 2%. Notably, JNJ has increased its dividend for 64 consecutive years, making it a Dividend King and an attractive long-term income holding.
Although Johnson & Johnson has a more established dividend-growth history, UnitedHealth has increased its dividend for 16 consecutive years and offers the higher yield.
Image Source: Zacks Investment Research
Bottom Line: UNH Is the Better Buy After Q3 Earnings
UnitedHealth's stronger earnings momentum, improving medical cost management, more reasonable valuation, and slightly higher dividend yield make it the more compelling healthcare investment following Q3 earnings.
Keeping that in mind, UNH currently sports a Zacks Rank #2 (Buy), supported by a trend of positive earnings estimate revisions. In contrast, JNJ lands a Zacks Rank #4 (Sell) as earnings estimates have declined despite the company's solid long-term fundamentals.
Considering JNJ's impressive YTD gains and relatively premium valuation, this could be an ideal time for investors to take profits and consider UNH's improving outlook and rebound potential.
View the Zacks #1 Rank List
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UnitedHealth vs. Johnson & Johnson: Which Stock Is the Better Buy After Q3 Earnings?
Key Takeaways
Healthcare giants UnitedHealth Group (UNH - Free Report) ) and Johnson & Johnson (JNJ - Free Report) ) reported Q3 results on Tuesday, with both raising their full-year earnings outlooks but delivering contrasting reports.
While UnitedHealth's stronger-than-expected results highlighted improving medical cost management and a potential earnings recovery, Johnson & Johnson's growth in pharmaceuticals was tempered by weakness in its medical technology business.
With both healthcare leaders offering attractive dividend income, let's examine which stock presents the better investment opportunity following Q3 earnings.
UnitedHealth's Q3 Earnings Signal a Recovery
UnitedHealth reported adjusted Q3 earnings of $4.69 per share, beating the Zacks Consensus Estimate of $4.12 by nearly 14% and jumping 60% from EPS of $2.92 a year ago. Revenue reached $112.69 billion, exceeding expectations by 1% despite dipping from $113.16 billion in the prior-year quarter.
Encouragingly, UnitedHealth's medical cost ratio improved to 88.4% from 89.9% a year earlier, reflecting stronger medical cost management and pricing discipline that helped drive its impressive earnings growth.
Management raised its full-year adjusted EPS outlook to at least $20.50, representing 25% year-over-year growth and reinforcing optimism about improving profitability. Most importantly, the updated EPS guidance came in above Wall Street’s forecast of $19.85 per share.
This comes despite ongoing Medicare Advantage reimbursement pressures and challenges within its Optum business, which provides pharmacy benefits, healthcare services, and technology solutions.
Image Source: Zacks Investment Research
Johnson & Johnson's Q3 Results Highlight Mixed Momentum
Johnson & Johnson posted adjusted Q3 earnings of $2.59 per share, topping the Zacks EPS Consensus of $2.53 by 2%. That said, earnings declined 7.5% YoY, while revenue increased 6% to $25.4 billion, but narrowly missed estimates.
The company's Innovative Medicine division remained a bright spot, with sales climbing 7.7%, supported by strong demand for key pharmaceutical products. However, J&J's MedTech division, which specializes in cardiovascular devices, orthopedic implants, surgical equipment, and vision care products, saw revenue increase just 2.5% to $8.64 billion, falling short of expectations.
Despite these challenges, J&J raised its 2026 adjusted EPS guidance to $11.05-$11.15, up from its prior outlook of $10.96-$11.11 and representing more than 2% annual growth. Additionally, J&J expects annual revenue to reach $101.2 billion, representing 7% YoY growth.
Still, the updated EPS outlook came in slightly below the Street’s current forecast of $11.16.
Image Source: Zacks Investment Research
Performance & Valuation Comparison
Johnson & Johnson has been the stronger performer in 2026, with shares up more than 20% year-to-date when including dividends compared with UnitedHealth's roughly 17% advance.
Over the last three years, JNJ’s total return of 70% has trailed the broader market but has significantly outpaced the Zacks Medical Sector’s 9% gain. Meanwhile, UNH is still down 25% in the last three years, amid elevated medical costs, regulatory and policy headwinds, margin compression, and concerns over future profitability.
Image Source: Zacks Investment Research
However, UnitedHealth offers a more appealing valuation, with UNH trading around 19X forward earnings, compared with JNJ's 23X. Both stocks trade at discounts to the Zacks Medical Sector’s 25X, but UNH certainly offers greater value, especially if its earnings recovery continues.
Image Source: Zacks Investment Research
Dividend Comparison
UnitedHealth currently pays a quarterly dividend of $2.32 per share, representing an annualized payout of $9.28 and a yield of approximately 2.45%.
Johnson & Johnson offers an annualized dividend of $5.36 per share, yielding roughly 2%. Notably, JNJ has increased its dividend for 64 consecutive years, making it a Dividend King and an attractive long-term income holding.
Although Johnson & Johnson has a more established dividend-growth history, UnitedHealth has increased its dividend for 16 consecutive years and offers the higher yield.
Image Source: Zacks Investment Research
Bottom Line: UNH Is the Better Buy After Q3 Earnings
UnitedHealth's stronger earnings momentum, improving medical cost management, more reasonable valuation, and slightly higher dividend yield make it the more compelling healthcare investment following Q3 earnings.
Keeping that in mind, UNH currently sports a Zacks Rank #2 (Buy), supported by a trend of positive earnings estimate revisions. In contrast, JNJ lands a Zacks Rank #4 (Sell) as earnings estimates have declined despite the company's solid long-term fundamentals.
Considering JNJ's impressive YTD gains and relatively premium valuation, this could be an ideal time for investors to take profits and consider UNH's improving outlook and rebound potential.