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Johnson & Johnson (JNJ) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research

In the latest trading session, Johnson & Johnson (JNJ) closed at $147.01, marking a +0.33% move from the previous day. This move outpaced the S&P 500's daily gain of 0.19%. Elsewhere, the Dow gained 0.31%, while the tech-heavy Nasdaq added 0.08%.

Heading into today, shares of the world's biggest maker of health care products had gained 2.06% over the past month, outpacing the Medical sector's gain of 1.85% and lagging the S&P 500's gain of 3.72% in that time.

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. The company is expected to report EPS of $1.87, down 5.08% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $20.79 billion, up 1.95% from the year-ago period.

Investors should also note any recent changes to analyst estimates for JNJ. 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. 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.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 0.15% higher within the past month. JNJ is currently a Zacks Rank #2 (Buy).

Valuation is also important, so investors should note that JNJ has a Forward P/E ratio of 16.13 right now. Its industry sports an average Forward P/E of 15.84, 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 2.36. 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 1.95 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 51, which puts it in the top 20% 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.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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