Johnson & Johnson (JNJ) Gains But Lags Market: What You Should Know
Johnson & Johnson (JNJ) closed at $147.11 in the latest trading session, marking a +1% move from the prior day. This change lagged the S&P 500's 1.61% gain on the day. At the same time, the Dow added 1.51%, and the tech-heavy Nasdaq gained 1.87%.
Prior to today's trading, shares of the world's biggest maker of health care products had lost 4.78% over the past month. This has lagged the Medical sector's loss of 2.02% and the S&P 500's loss of 4.08% in that time.
JNJ will be looking to display strength as it nears its next earnings release, which is expected to be October 13, 2020. In that report, analysts expect JNJ to post earnings of $1.98 per share. This would mark a year-over-year decline of 6.6%. Our most recent consensus estimate is calling for quarterly revenue of $20.40 billion, down 1.57% from the year-ago period.
Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $7.85 per share and revenue of $80.86 billion. These totals would mark changes of -9.56% and -1.46%, respectively, from last year.
Investors should also note any recent changes to analyst estimates for JNJ. Recent revisions tend to reflect the latest near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.
Our research shows that these estimate changes are directly correlated with near-term stock prices. 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, 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 remained stagnant. JNJ is holding a Zacks Rank of #4 (Sell) right now.
Valuation is also important, so investors should note that JNJ has a Forward P/E ratio of 18.55 right now. Its industry sports an average Forward P/E of 14.57, so we one might conclude that JNJ is trading at a premium comparatively.
We can also see that JNJ currently has a PEG ratio of 3.23. 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. JNJ's industry had an average PEG ratio of 2.02 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 171, which puts it in the bottom 33% 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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