U.S. Markets open in 9 hrs 26 mins

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

Zacks Equity Research

Merck (MRK) closed the most recent trading day at $86.05, moving -0.69% from the previous trading session. This move lagged the S&P 500's daily gain of 1.08%. At the same time, the Dow added 0.91%, and the tech-heavy Nasdaq gained 1.31%.

Coming into today, shares of the pharmaceutical company had gained 2.73% in the past month. In that same time, the Medical sector lost 1.27%, while the S&P 500 lost 0.68%.

MRK will be looking to display strength as it nears its next earnings release. On that day, MRK is projected to report earnings of $1.26 per share, which would represent year-over-year growth of 5.88%. Our most recent consensus estimate is calling for quarterly revenue of $11.73 billion, up 8.64% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $4.89 per share and revenue of $46.09 billion. These totals would mark changes of +12.67% and +8.97%, respectively, from last year.

Investors might also notice 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.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. 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 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 0.11% higher. MRK is currently a Zacks Rank #2 (Buy).

In terms of valuation, MRK is currently trading at a Forward P/E ratio of 17.72. Its industry sports an average Forward P/E of 14.06, so we one might conclude that MRK is trading at a premium comparatively.

Investors should also note that MRK has a PEG ratio of 1.77 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 industry currently had an average PEG ratio of 2.03 as of yesterday's close.

The Large Cap Pharmaceuticals industry is part of the Medical sector. This group has a Zacks Industry Rank of 30, putting it in the top 12% 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.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Merck & Co., Inc. (MRK) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research