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

Zacks Equity Research

In the latest trading session, Johnson & Johnson (JNJ) closed at $131.53, marking a +0.71% move from the previous day. The stock lagged the S&P 500's daily gain of 0.83%. Elsewhere, the Dow gained 0.93%, while the tech-heavy Nasdaq added 0.9%.

Heading into today, shares of the world's biggest maker of health care products had gained 1.37% over the past month, outpacing the Medical sector's loss of 1.12% and the S&P 500's loss of 2.38% in that time.

Investors will be hoping for strength from JNJ as it approaches its next earnings release. The company is expected to report EPS of $2, down 2.44% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $20.09 billion, down 1.25% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $8.60 per share and revenue of $81.51 billion. These totals would mark changes of +5.13% and -0.09%, respectively, from last year.

Investors should also note any 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.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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 remained stagnant within the past month. JNJ is currently sporting a Zacks Rank of #3 (Hold).

Digging into valuation, JNJ currently has a Forward P/E ratio of 15.19. This valuation marks a premium compared to its industry's average Forward P/E of 13.92.

It is also worth noting that JNJ currently has a PEG ratio of 2.21. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Large Cap Pharmaceuticals industry currently had an average PEG ratio of 1.98 as of yesterday's close.

The Large Cap Pharmaceuticals industry is part of the Medical sector. This group has a Zacks Industry Rank of 23, putting it in the top 9% 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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