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

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In the latest trading session, Johnson & Johnson (JNJ - Free Report) closed at $138.56, marking a +0.36% move from the previous day. This change lagged the S&P 500's 1.47% gain on the day. At the same time, the Dow added 0.79%, and the tech-heavy Nasdaq gained 2.02%.

Coming into today, shares of the world's biggest maker of health care products had gained 4.55% in the past month. In that same time, the Medical sector gained 1.05%, while the S&P 500 gained 1.5%.

Investors will be hoping for strength from JNJ as it approaches its next earnings release. On that day, JNJ is projected to report earnings of $2.10 per share, which would represent year-over-year growth of 1.94%. Meanwhile, our latest consensus estimate is calling for revenue of $19.67 billion, down 1.67% from the prior-year quarter.

JNJ's full-year Zacks Consensus Estimates are calling for earnings of $8.57 per share and revenue of $81.23 billion. These results would represent year-over-year changes of +4.77% and -0.43%, respectively.

It is also important to note the recent changes to analyst estimates for JNJ. Recent revisions tend to reflect the latest near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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. Over the past month, the Zacks Consensus EPS estimate has moved 0.03% lower. JNJ is currently a Zacks Rank #3 (Hold).

Valuation is also important, so investors should note that JNJ has a Forward P/E ratio of 16.11 right now. This valuation marks a premium compared to its industry's average Forward P/E of 15.26.

Meanwhile, JNJ's PEG ratio is currently 2.12. 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 2.08 at yesterday's closing price.

The Large Cap Pharmaceuticals industry is part of the Medical sector. This group has a Zacks Industry Rank of 144, putting it in the bottom 44% 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.

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