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Johnson & Johnson (JNJ) Dips More Than Broader Markets: What You Should Know

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In the latest trading session, Johnson & Johnson (JNJ - Free Report) closed at $145.93, marking a -0.35% move from the previous day. This change lagged the S&P 500's 0.02% loss on the day. Elsewhere, the Dow lost 0.13%, while the tech-heavy Nasdaq added 0.08%.

Coming into today, shares of the world's biggest maker of health care products had gained 6.75% in the past month. In that same time, the Medical sector gained 5.88%, while the S&P 500 gained 3.81%.

JNJ will be looking to display strength as it nears its next earnings release, which is expected to be January 22, 2020. The company is expected to report EPS of $1.86, down 5.58% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $20.78 billion, up 1.87% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $8.66 per share and revenue of $82.04 billion. These totals would mark changes of +5.87% and +0.56%, respectively, from last year.

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. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. 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, 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 0.01% higher. JNJ is currently sporting a Zacks Rank of #2 (Buy).

Digging into valuation, JNJ currently has a Forward P/E ratio of 16.91. Its industry sports an average Forward P/E of 15.6, so we one might conclude that JNJ is trading at a premium comparatively.

Also, we should mention that JNJ has a PEG ratio of 2.47. 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 Large Cap Pharmaceuticals industry currently had an average PEG ratio of 2.24 as of yesterday's close.

The Large Cap Pharmaceuticals industry is part of the Medical sector. This group has a Zacks Industry Rank of 24, putting it in the top 10% 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.

To follow JNJ in the coming trading sessions, be sure to utilize Zacks.com.


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