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

Zacks Equity Research
Ameris Bancorp (ABCB) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.

In the latest trading session, Johnson & Johnson (JNJ) closed at $139.44, marking a -0.46% move from the previous day. This move lagged the S&P 500's daily gain of 0.09%. At the same time, the Dow added 0.09%, and the tech-heavy Nasdaq gained 0.62%.

Prior to today's trading, shares of the world's biggest maker of health care products had gained 1.36% over the past month. This has lagged the Medical sector's gain of 3.37% and the S&P 500's gain of 2.08% in that time.

Investors will be hoping for strength from JNJ as it approaches its next earnings release. On that day, JNJ is projected to report earnings of $2.42 per share, which would represent year-over-year growth of 15.24%. Meanwhile, our latest consensus estimate is calling for revenue of $20.32 billion, down 2.43% from the prior-year quarter.

JNJ's full-year Zacks Consensus Estimates are calling for earnings of $8.60 per share and revenue of $81.20 billion. These results would represent year-over-year changes of +5.13% and -0.46%, respectively.

Investors might also notice recent changes to analyst estimates for JNJ. Recent revisions tend to reflect the latest near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. 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, 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 has moved 0.04% higher within the past month. JNJ currently has a Zacks Rank of #3 (Hold).

Looking at its valuation, JNJ is holding a Forward P/E ratio of 16.29. This valuation marks a premium compared to its industry's average Forward P/E of 14.56.

Investors should also note that JNJ has a PEG ratio of 2.42 right now. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Large Cap Pharmaceuticals industry currently had an average PEG ratio of 2.11 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 63, which puts it in the top 25% 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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