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Johnson & Johnson (JNJ) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research

In the latest trading session, Johnson & Johnson (JNJ) closed at $131.17, marking a +1.25% move from the previous day. The stock outpaced the S&P 500's daily gain of 0.72%. Meanwhile, the Dow gained 0.85%, and the Nasdaq, a tech-heavy index, added 1.06%.

Heading into today, shares of the world's biggest maker of health care products had lost 2.9% over the past month, lagging the Medical sector's loss of 1.41% and the S&P 500's gain of 2.25% 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, down 2.44% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $20.09 billion, down 1.25% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $8.60 per share and revenue of $81.51 billion. These totals would mark changes of +5.13% and -0.09%, respectively, from last year.

Investors should also note any recent changes to analyst estimates for JNJ. These revisions help to show the ever-changing nature of near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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 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 remained stagnant. JNJ is currently a Zacks Rank #3 (Hold).

Looking at its valuation, JNJ is holding a Forward P/E ratio of 15.07. This valuation marks a premium compared to its industry's average Forward P/E of 13.8.

It is also worth noting that JNJ currently has a PEG ratio of 2.19. 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 was holding an average PEG ratio of 2 at yesterday's closing price.

The Large Cap Pharmaceuticals industry is part of the Medical sector. This industry currently has a Zacks Industry Rank of 43, which puts it in the top 17% 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.

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


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