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

Zacks Equity Research

Johnson & Johnson (JNJ) closed at $145.39 in the latest trading session, marking a +0.3% move from the prior day. This move lagged the S&P 500's daily gain of 0.67%. At the same time, the Dow added 0.74%, and the tech-heavy Nasdaq gained 0.81%.

Coming into today, shares of the world's biggest maker of health care products had gained 2.82% in the past month. In that same time, the Medical sector gained 1.59%, while the S&P 500 gained 3.55%.

Wall Street will be looking for positivity from JNJ as it approaches its next earnings report date. This is expected to be January 22, 2020. On that day, JNJ is projected to report earnings of $1.86 per share, which would represent a year-over-year decline of 5.58%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $20.78 billion, up 1.87% from the year-ago period.

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.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 0.1% higher. JNJ is currently a Zacks Rank #2 (Buy).

In terms of valuation, JNJ is currently trading at a Forward P/E ratio of 15.97. For comparison, its industry has an average Forward P/E of 15.69, which means JNJ is trading at a premium to the group.

We can also see that JNJ currently has a PEG ratio of 2.33. 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. JNJ's industry had an average PEG ratio of 2.12 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 82, which puts it in the top 33% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To follow JNJ in the coming trading sessions, be sure to utilize Zacks.com.


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