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

Zacks Equity Research

Johnson & Johnson (JNJ) closed the most recent trading day at $148.25, moving +0.72% from the previous trading session. This change lagged the S&P 500's 0.82% gain on the day. At the same time, the Dow added 1.05%, and the tech-heavy Nasdaq gained 0.59%.

Wall Street will be looking for positivity from JNJ as it approaches its next earnings report date. The company is expected to report EPS of $1.45, down 43.8% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $17.33 billion, down 15.73% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $7.68 per share and revenue of $79.48 billion, which would represent changes of -11.52% and -3.14%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for JNJ. These revisions typically reflect the latest short-term business trends, which can change frequently. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Over the past month, the Zacks Consensus EPS estimate remained stagnant. JNJ currently has a Zacks Rank of #4 (Sell).

Looking at its valuation, JNJ is holding a Forward P/E ratio of 19.18. Its industry sports an average Forward P/E of 14.84, so we one might conclude that JNJ is trading at a premium comparatively.

Meanwhile, JNJ's PEG ratio is currently 3.2. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Large Cap Pharmaceuticals industry currently 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 17, which puts it in the top 7% 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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