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Abbott (ABT) Gains But Lags Market: What You Should Know

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Abbott (ABT - Free Report) closed at $117.48 in the latest trading session, marking a +1.7% move from the prior day. The stock lagged the S&P 500's daily gain of 2.14%. Elsewhere, the Dow gained 1.82%, while the tech-heavy Nasdaq lost 0.01%.

Coming into today, shares of the maker of infant formula, medical devices and drugs had lost 5.91% in the past month. In that same time, the Medical sector lost 1.34%, while the S&P 500 lost 5.01%.

Abbott will be looking to display strength as it nears its next earnings release. The company is expected to report EPS of $1.48, up 12.12% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $10.76 billion, up 2.92% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $4.81 per share and revenue of $40.56 billion. These totals would mark changes of -7.68% and -5.83%, respectively, from last year.

It is also important to note the recent changes to analyst estimates for Abbott. These recent revisions tend to reflect the evolving nature of short-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

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. The Zacks Consensus EPS estimate has moved 1.74% lower within the past month. Abbott is currently a Zacks Rank #3 (Hold).

In terms of valuation, Abbott is currently trading at a Forward P/E ratio of 24. This valuation marks a premium compared to its industry's average Forward P/E of 21.46.

Investors should also note that ABT has a PEG ratio of 2.32 right now. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Medical - Products was holding an average PEG ratio of 1.74 at yesterday's closing price.

The Medical - Products industry is part of the Medical sector. This group has a Zacks Industry Rank of 174, putting it in the bottom 32% 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.

You can find more information on all of these metrics, and much more, on Zacks.com.


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