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

Zacks Equity Research

Johnson & Johnson (JNJ) closed at $129.64 in the latest trading session, marking a +0.08% move from the prior day. This change lagged the S&P 500's 0.26% gain on the day. Elsewhere, the Dow gained 0.13%, while the tech-heavy Nasdaq added 0.4%.

Prior to today's trading, shares of the world's biggest maker of health care products had lost 2.05% over the past month. This has lagged the Medical sector's gain of 0.32% and the S&P 500's gain of 3.92% in that time.

JNJ will be looking to display strength as it nears its next earnings release, which is expected to be October 15, 2019. In that report, analysts expect JNJ to post earnings of $2 per share. This would mark a year-over-year decline of 2.44%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $20.05 billion, down 1.45% from the year-ago period.

JNJ's full-year Zacks Consensus Estimates are calling for earnings of $8.60 per share and revenue of $81.51 billion. These results would represent year-over-year changes of +5.13% and -0.09%, respectively.

Investors might also notice recent changes to analyst estimates for JNJ. These revisions typically reflect the latest short-term business trends, which can change frequently. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, 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. Within the past 30 days, our consensus EPS projection remained stagnant. JNJ is currently a Zacks Rank #3 (Hold).

Digging into valuation, JNJ currently has a Forward P/E ratio of 15.07. Its industry sports an average Forward P/E of 13.73, so we one might conclude that JNJ is trading at a premium comparatively.

It is also worth noting that JNJ currently has a PEG ratio of 2.19. 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 was holding an average PEG ratio of 1.94 at yesterday's closing price.

The Large Cap Pharmaceuticals industry is part of the Medical sector. This group has a Zacks Industry Rank of 38, putting it in the top 15% 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.

Make sure to utilize Zacks. Com to follow all of these stock-moving metrics, and more, in the coming trading sessions.

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