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Johnson & Johnson (JNJ) Gains But Lags Market: What You Should Know

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Zacks Equity Research
·3 min read
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In the latest trading session, Johnson & Johnson (JNJ) closed at $119.40, marking a +0.18% move from the previous day. This move lagged the S&P 500's daily gain of 1.15%. Elsewhere, the Dow gained 2.39%, while the tech-heavy Nasdaq lost 0.45%.

Coming into today, shares of the world's biggest maker of health care products had lost 17.61% in the past month. In that same time, the Medical sector lost 19.66%, while the S&P 500 lost 24.07%.

Investors will be hoping for strength from JNJ as it approaches its next earnings release, which is expected to be April 14, 2020. The company is expected to report EPS of $2.18, up 3.81% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $20.48 billion, up 2.27% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $9.03 per share and revenue of $85.90 billion, which would represent changes of +4.03% and +4.68%, respectively, from the prior year.

Any recent changes to analyst estimates for JNJ should also be noted by investors. Recent revisions tend to reflect the latest near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. The Zacks Consensus EPS estimate has moved 0.06% higher within the past month. JNJ is currently a Zacks Rank #3 (Hold).

Looking at its valuation, JNJ is holding a Forward P/E ratio of 13.2. This represents a premium compared to its industry's average Forward P/E of 12.1.

It is also worth noting that JNJ currently has a PEG ratio of 1.99. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Large Cap Pharmaceuticals industry currently had an average PEG ratio of 1.59 as of yesterday's close.

The Large Cap Pharmaceuticals industry is part of the Medical sector. This industry currently has a Zacks Industry Rank of 60, which puts it in the top 24% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.

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Zacks Investment Research