Back to top

Image: Bigstock

Johnson & Johnson (JNJ) Gains But Lags Market: What You Should Know

Read MoreHide Full Article

Johnson & Johnson (JNJ - Free Report) closed at $177.84 in the latest trading session, marking a +1.19% move from the prior day. This move lagged the S&P 500's daily gain of 1.43%. At the same time, the Dow added 1.58%, and the tech-heavy Nasdaq lost 0.01%.

Heading into today, shares of the world's biggest maker of health care products had gained 3.83% over the past month, lagging the Medical sector's gain of 5.95% and the S&P 500's gain of 5.12% in that time.

Investors will be hoping for strength from Johnson & Johnson as it approaches its next earnings release. The company is expected to report EPS of $2.22, up 4.23% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $23.79 billion, down 4.1% from the year-ago period.

JNJ's full-year Zacks Consensus Estimates are calling for earnings of $10.04 per share and revenue of $95.02 billion. These results would represent year-over-year changes of +2.45% and +1.33%, respectively.

It is also important to note the recent changes to analyst estimates for Johnson & Johnson. These revisions typically reflect the latest short-term business trends, which can change frequently. 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. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

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. The Zacks Consensus EPS estimate has moved 0.03% lower within the past month. Johnson & Johnson is currently sporting a Zacks Rank of #3 (Hold).

Investors should also note Johnson & Johnson's current valuation metrics, including its Forward P/E ratio of 17.5. For comparison, its industry has an average Forward P/E of 14.92, which means Johnson & Johnson is trading at a premium to the group.

We can also see that JNJ currently has a PEG ratio of 3.48. 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 2.09 as of yesterday's close.

The Large Cap Pharmaceuticals industry is part of the Medical sector. This industry currently has a Zacks Industry Rank of 97, which puts it in the top 39% 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.

Make sure to utilize Zacks.com to follow all of these stock-moving metrics, and more, in the coming trading sessions.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Johnson & Johnson (JNJ) - free report >>

Published in