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

Zacks Equity Research

Merck (MRK) closed the most recent trading day at $86.90, moving +1.63% from the previous trading session. This move outpaced the S&P 500's daily gain of 0.77%. Meanwhile, the Dow gained 0.67%, and the Nasdaq, a tech-heavy index, added 0.75%.

Prior to today's trading, shares of the pharmaceutical company had gained 5.46% over the past month. This has lagged the Medical sector's gain of 7.75% and the S&P 500's gain of 8.19% in that time.

MRK will be looking to display strength as it nears its next earnings release, which is expected to be July 30, 2019. The company is expected to report EPS of $1.15, up 8.49% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $10.91 billion, up 4.21% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $4.74 per share and revenue of $44.56 billion, which would represent changes of +9.22% and +5.36%, respectively, from the prior year.

Any recent changes to analyst estimates for MRK should also be noted by investors. 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.

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. Over the past month, the Zacks Consensus EPS estimate has moved 0.21% higher. MRK currently has a Zacks Rank of #3 (Hold).

Digging into valuation, MRK currently has a Forward P/E ratio of 18.06. This represents a premium compared to its industry's average Forward P/E of 14.94.

It is also worth noting that MRK currently has a PEG ratio of 1.83. 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 2.15 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 153, which puts it in the bottom 41% 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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