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Merck (MRK) Gains But Lags Market: What You Should Know

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In the latest trading session, Merck (MRK - Free Report) closed at $84.21, marking a +0.06% move from the previous day. The stock lagged the S&P 500's daily gain of 0.52%. Elsewhere, the Dow gained 0.01%, while the tech-heavy Nasdaq added 1.21%.

Heading into today, shares of the pharmaceutical company had lost 0.71% over the past month, lagging the Medical sector's of 0% and the S&P 500's gain of 0.49% in that time.

Wall Street will be looking for positivity from MRK as it approaches its next earnings report date. The company is expected to report EPS of $1.45, down 3.97% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $12.01 billion, down 3.12% from the prior-year quarter.

MRK's full-year Zacks Consensus Estimates are calling for earnings of $5.69 per share and revenue of $47.79 billion. These results would represent year-over-year changes of +9.63% and +2.03%, respectively.

It is also important to note the recent changes to analyst estimates for MRK. Recent revisions tend to reflect the latest near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. 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, 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 0.21% lower. MRK is holding a Zacks Rank of #3 (Hold) right now.

Looking at its valuation, MRK is holding a Forward P/E ratio of 14.78. Its industry sports an average Forward P/E of 14.89, so we one might conclude that MRK is trading at a discount comparatively.

Meanwhile, MRK's PEG ratio is currently 2.19. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Large Cap Pharmaceuticals was holding an average PEG ratio of 2.06 at yesterday's closing price.

The Large Cap Pharmaceuticals industry is part of the Medical sector. This group has a Zacks Industry Rank of 126, putting it in the top 50% 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.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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