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Johnson & Johnson (JNJ) Gains As Market Dips: What You Should Know

Zacks Equity Research

Johnson & Johnson (JNJ) closed at $129.64 in the latest trading session, marking a +1.44% move from the prior day. This change outpaced the S&P 500's 0.32% loss on the day. At the same time, the Dow lost 0.47%, and the tech-heavy Nasdaq lost 0.34%.

Prior to today's trading, shares of the world's biggest maker of health care products had lost 3.92% over the past month. This has lagged the Medical sector's loss of 2.66% and was narrower than the S&P 500's loss of 4.64% in that time.

Wall Street will be looking for positivity from JNJ as it approaches its next earnings report date. 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.

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

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. The Zacks Consensus EPS estimate remained stagnant within the past month. JNJ currently has a Zacks Rank of #3 (Hold).

Investors should also note JNJ's current valuation metrics, including its Forward P/E ratio of 14.86. For comparison, its industry has an average Forward P/E of 14.05, which means JNJ is trading at a premium to the group.

Investors should also note that JNJ has a PEG ratio of 2.16 right now. 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. Large Cap Pharmaceuticals stocks are, on average, holding a PEG ratio of 2.02 based on yesterday's closing prices.

The Large Cap Pharmaceuticals industry is part of the Medical sector. This industry currently has a Zacks Industry Rank of 29, which puts it in the top 12% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual 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.

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


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