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Merck (MRK) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research

Merck (MRK) closed at $82.87 in the latest trading session, marking a +1.93% move from the prior day. This change outpaced the S&P 500's 0.29% gain on the day. Meanwhile, the Dow gained 0.17%, and the Nasdaq, a tech-heavy index, added 0.19%.

Heading into today, shares of the pharmaceutical company had lost 2.75% over the past month, lagging the Medical sector's loss of 2.68% and the S&P 500's gain of 0.32% in that time.

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. On that day, MRK is projected to report earnings of $1.25 per share, which would represent year-over-year growth of 5.04%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $11.70 billion, up 8.39% from the year-ago period.

MRK's full-year Zacks Consensus Estimates are calling for earnings of $4.91 per share and revenue of $46.03 billion. These results would represent year-over-year changes of +13.13% and +8.84%, respectively.

Investors should also note any 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.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 0.23% lower. MRK is currently a Zacks Rank #3 (Hold).

Looking at its valuation, MRK is holding a Forward P/E ratio of 16.57. This valuation marks a premium compared to its industry's average Forward P/E of 14.41.

We can also see that MRK currently has a PEG ratio of 1.9. 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 2.01 at yesterday's closing price.

The Large Cap Pharmaceuticals industry is part of the Medical sector. This industry currently has a Zacks Industry Rank of 99, which puts it in the top 39% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our 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.

To follow MRK in the coming trading sessions, be sure to utilize Zacks.com.

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