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Merck (MRK) Gains But Lags Market: What You Should Know

Zacks Equity Research

In the latest trading session, Merck (MRK) closed at $85.04, marking a +0.41% move from the previous day. The stock lagged the S&P 500's daily gain of 1%.

Coming into today, shares of the pharmaceutical company had gained 3.24% in the past month. In that same time, the Medical sector lost 3.21%, while the S&P 500 lost 1.22%.

Wall Street will be looking for positivity from MRK as it approaches its next earnings report date. This is expected to be October 29, 2019. The company is expected to report EPS of $1.25, up 5.04% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $11.70 billion, up 8.39% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $4.91 per share and revenue of $46.03 billion, which would represent changes of +13.13% and +8.84%, respectively, from the prior year.

Investors should also note any recent changes to analyst estimates for MRK. These revisions help to show the ever-changing nature of near-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. 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. Over the past month, the Zacks Consensus EPS estimate has moved 0.1% lower. MRK is holding a Zacks Rank of #3 (Hold) right now.

Digging into valuation, MRK currently has a Forward P/E ratio of 17.25. This valuation marks a premium compared to its industry's average Forward P/E of 14.35.

Also, we should mention that MRK has a PEG ratio of 1.72. 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 2.01 as of yesterday's close.

The Large Cap Pharmaceuticals industry is part of the Medical sector. This group has a Zacks Industry Rank of 100, putting it in the top 40% 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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