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Merck (MRK) Gains As Market Dips: What You Should Know

Zacks Equity Research
·3 mins read

Merck (MRK) closed the most recent trading day at $80.71, moving +0.44% from the previous trading session. This change outpaced the S&P 500's 0.63% loss on the day. Meanwhile, the Dow lost 0.55%, and the Nasdaq, a tech-heavy index, lost 0.1%.

Coming into today, shares of the pharmaceutical company had lost 4.52% in the past month. In that same time, the Medical sector gained 3.79%, while the S&P 500 gained 5.91%.

Wall Street will be looking for positivity from MRK as it approaches its next earnings report date. This is expected to be October 27, 2020. On that day, MRK is projected to report earnings of $1.42 per share, which would represent a year-over-year decline of 5.96%. Our most recent consensus estimate is calling for quarterly revenue of $12.01 billion, down 3.12% from the year-ago period.

MRK's full-year Zacks Consensus Estimates are calling for earnings of $5.68 per share and revenue of $47.76 billion. These results would represent year-over-year changes of +9.44% and +1.97%, respectively.

Any recent changes to analyst estimates for MRK should also be noted by investors. These recent revisions tend to reflect the evolving nature of short-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.

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. The Zacks Consensus EPS estimate has moved 0.18% lower within the past month. MRK is currently sporting a Zacks Rank of #3 (Hold).

Digging into valuation, MRK currently has a Forward P/E ratio of 14.14. This represents a discount compared to its industry's average Forward P/E of 14.36.

Also, we should mention that MRK has a PEG ratio of 2.1. 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. The Large Cap Pharmaceuticals was holding an average PEG ratio of 2 at yesterday's closing price.

The Large Cap Pharmaceuticals industry is part of the Medical sector. This group has a Zacks Industry Rank of 184, putting it in the bottom 28% 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.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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