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

Zacks Equity Research

Merck (MRK) closed at $86.10 in the latest trading session, marking a +0.14% move from the prior day. The stock outpaced the S&P 500's daily loss of 1.57%. At the same time, the Dow lost 1.57%, and the tech-heavy Nasdaq lost 1.89%.

Coming into today, shares of the pharmaceutical company had lost 5.87% in the past month. In that same time, the Medical sector lost 1.74%, while the S&P 500 gained 2.35%.

MRK will be looking to display strength as it nears its next earnings release, which is expected to be February 5, 2020. The company is expected to report EPS of $1.14, up 9.62% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $12.14 billion, up 10.35% from the year-ago period.

Investors might also notice recent changes to analyst estimates for MRK. These revisions help to show the ever-changing nature of near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, 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 0.88% higher. MRK currently has a Zacks Rank of #3 (Hold).

Valuation is also important, so investors should note that MRK has a Forward P/E ratio of 15.52 right now. For comparison, its industry has an average Forward P/E of 15.5, which means MRK is trading at a premium to the group.

Investors should also note that MRK has a PEG ratio of 1.72 right now. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Large Cap Pharmaceuticals was holding an average PEG ratio of 1.94 at yesterday's closing price.

The Large Cap Pharmaceuticals industry is part of the Medical sector. This group has a Zacks Industry Rank of 72, putting it in the top 29% 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.

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


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