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

Zacks Equity Research

Merck (MRK) closed the most recent trading day at $76.12, moving +1.24% from the previous trading session. This move lagged the S&P 500's daily gain of 1.47%. At the same time, the Dow added 2.32%, and the tech-heavy Nasdaq gained 1.2%.

Prior to today's trading, shares of the pharmaceutical company had lost 4.87% over the past month. This has lagged the Medical sector's loss of 0.38% and the S&P 500's gain of 0.74% in that time.

MRK will be looking to display strength as it nears its next earnings release. In that report, analysts expect MRK to post earnings of $1.08 per share. This would mark a year-over-year decline of 16.92%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $10.84 billion, down 7.85% from the year-ago period.

MRK's full-year Zacks Consensus Estimates are calling for earnings of $5.31 per share and revenue of $47.31 billion. These results would represent year-over-year changes of +2.31% and +0.99%, respectively.

Investors might also notice recent changes to analyst estimates for MRK. Recent revisions tend to reflect the latest near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. MRK is holding a Zacks Rank of #4 (Sell) right now.

Valuation is also important, so investors should note that MRK has a Forward P/E ratio of 14.16 right now. For comparison, its industry has an average Forward P/E of 14.63, which means MRK is trading at a discount to the group.

Investors should also note that MRK has a PEG ratio of 2.1 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 2.08 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 29, which puts it in the top 12% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual 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.

You can find more information on all of these metrics, and much more, on Zacks.com.


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