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Merck (MRK) Dips More Than Broader Markets: What You Should Know

Zacks Equity Research

In the latest trading session, Merck (MRK) closed at $91.44, marking a -0.33% move from the previous day. This move lagged the S&P 500's daily loss of 0.02%. Meanwhile, the Dow lost 0.13%, and the Nasdaq, a tech-heavy index, added 0.08%.

Coming into today, shares of the pharmaceutical company had gained 7.05% in the past month. In that same time, the Medical sector gained 5.88%, while the S&P 500 gained 3.81%.

Wall Street will be looking for positivity from MRK as it approaches its next earnings report date. This is expected to be February 5, 2020. In that report, analysts expect MRK to post earnings of $1.14 per share. This would mark year-over-year growth of 9.62%. Meanwhile, our latest consensus estimate is calling for revenue of $12.14 billion, up 10.35% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $5.15 per share and revenue of $47 billion, which would represent changes of +18.66% and +11.12%, respectively, from the prior year.

Investors might also notice recent changes to analyst estimates for MRK. 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. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

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 remained stagnant within the past month. MRK is currently sporting a Zacks Rank of #2 (Buy).

Investors should also note MRK's current valuation metrics, including its Forward P/E ratio of 17.81. This valuation marks a premium compared to its industry's average Forward P/E of 15.6.

We can also see that MRK currently has a PEG ratio of 1.99. 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. MRK's industry had an average PEG ratio of 2.24 as of yesterday's close.

The Large Cap Pharmaceuticals industry is part of the Medical sector. This group has a Zacks Industry Rank of 24, putting it in the top 10% 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.

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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