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

Zacks Equity Research

In the latest trading session, Johnson & Johnson (JNJ) closed at $134.46, marking a +0.55% move from the previous day. The stock lagged the S&P 500's daily gain of 0.82%. At the same time, the Dow added 0.82%, and the tech-heavy Nasdaq gained 0.64%.

Prior to today's trading, shares of the world's biggest maker of health care products had lost 4.46% over the past month. This has lagged the Medical sector's loss of 1.72% and was narrower than the S&P 500's loss of 4.58% in that time.

JNJ will be looking to display strength as it nears its next earnings release. The company is expected to report EPS of $2.42, up 15.24% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $20.32 billion, down 2.43% from the year-ago period.

JNJ's full-year Zacks Consensus Estimates are calling for earnings of $8.60 per share and revenue of $81.20 billion. These results would represent year-over-year changes of +5.13% and -0.46%, respectively.

Any recent changes to analyst estimates for JNJ should also be noted by investors. 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.

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 ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 0.04% higher. 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 15.55 right now. This represents a premium compared to its industry's average Forward P/E of 14.3.

Also, we should mention that JNJ has a PEG ratio of 2.31. 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 2.09 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 40, which puts it in the top 16% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. 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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