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Merck (MRK) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research
·3-min read

Merck (MRK) closed at $78.41 in the latest trading session, marking a +0.81% move from the prior day. The stock outpaced the S&P 500's daily gain of 0.74%.

Prior to today's trading, shares of the pharmaceutical company had gained 3.03% over the past month. This has outpaced the Medical sector's gain of 3.01% and lagged the S&P 500's gain of 3.21% in that time.

On that day, MRK is projected to report earnings of $1.69 per share, which would represent year-over-year growth of 23.36%. Meanwhile, our latest consensus estimate is calling for revenue of $13.05 billion, up 20.06% from the prior-year quarter.

MRK's full-year Zacks Consensus Estimates are calling for earnings of $6.51 per share and revenue of $51.77 billion. These results would represent year-over-year changes of +9.6% and +7.86%, respectively.

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Any recent changes to analyst estimates for MRK should also be noted by investors. These recent revisions tend to reflect the evolving nature of short-term business trends. As a result, we can interpret positive estimate revisions as a good sign for 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. Within the past 30 days, our consensus EPS projection has moved 0.76% lower. MRK is currently sporting a Zacks Rank of #3 (Hold).

Valuation is also important, so investors should note that MRK has a Forward P/E ratio of 11.95 right now. For comparison, its industry has an average Forward P/E of 13.78, which means MRK is trading at a discount to the group.

It is also worth noting that MRK currently has a PEG ratio of 1.95. 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. Large Cap Pharmaceuticals stocks are, on average, holding a PEG ratio of 1.93 based on yesterday's closing prices.

The Large Cap Pharmaceuticals industry is part of the Medical sector. This group has a Zacks Industry Rank of 233, putting it in the bottom 9% 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.

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


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Zacks Investment Research