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Mallinckrodt (MNK) Gains But Lags Market: What You Should Know

Zacks Equity Research
Johnson & Johnson (JNJ) closed the most recent trading day at $144.24, moving +0.82% from the previous trading session.

Mallinckrodt (MNK) closed the most recent trading day at $23.80, moving +0.59% from the previous trading session. This change lagged the S&P 500's 1.09% gain on the day. Elsewhere, the Dow gained 0.84%, while the tech-heavy Nasdaq added 1.42%.

Heading into today, shares of the specialty pharmaceutical company had gained 11.5% over the past month, outpacing the Medical sector's gain of 1.58% and the S&P 500's gain of 1.18% in that time.

Investors will be hoping for strength from MNK as it approaches its next earnings release. In that report, analysts expect MNK to post earnings of $1.79 per share. This would mark year-over-year growth of 36.64%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $782.28 million, up 36.62% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $8.20 per share and revenue of $3.25 billion, which would represent changes of +2.37% and +21.19%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for MNK. Recent revisions tend to reflect the latest near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. 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. Within the past 30 days, our consensus EPS projection has moved 9.31% higher. MNK is currently sporting a Zacks Rank of #1 (Strong Buy).

Investors should also note MNK's current valuation metrics, including its Forward P/E ratio of 2.89. Its industry sports an average Forward P/E of 7.02, so we one might conclude that MNK is trading at a discount comparatively.

It is also worth noting that MNK currently has a PEG ratio of 0.24. 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. MNK's industry had an average PEG ratio of 1.19 as of yesterday's close.

The Medical - Generic Drugs industry is part of the Medical sector. This group has a Zacks Industry Rank of 90, putting it in the top 36% 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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