Johnson & Johnson (JNJ) Registers a Bigger Fall Than the Market: Important Facts to Note

Johnson & Johnson (JNJ) ended the recent trading session at $267.37, demonstrating a -2.21% change from the preceding day's closing price. This change lagged the S&P 500's 0.87% loss on the day. Elsewhere, the Dow lost 1.32%, while the tech-heavy Nasdaq lost 1%.

The stock of world's biggest maker of health care products has risen by 6.96% in the past month, lagging the Medical sector's gain of 7.67% and overreaching the S&P 500's gain of 3.48%.

The investment community will be paying close attention to the earnings performance of Johnson & Johnson in its upcoming release. In that report, analysts expect Johnson & Johnson to post earnings of $2.95 per share. This would mark year-over-year growth of 5.36%. Meanwhile, the latest consensus estimate predicts the revenue to be $25.36 billion, indicating a 5.71% increase compared to the same quarter of the previous year.

For the full year, the Zacks Consensus Estimates project earnings of $11.59 per share and a revenue of $101.09 billion, demonstrating changes of +7.41% and +7.32%, respectively, from the preceding year.

Any recent changes to analyst estimates for Johnson & Johnson 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 business outlook.

Our research demonstrates that these adjustments in estimates directly associate with imminent stock price performance. To take advantage of this, we've established the Zacks Rank, an exclusive model that considers these estimated changes and delivers an operational rating system.

The Zacks Rank system, stretching from #1 (Strong Buy) to #5 (Strong Sell), has a noteworthy track record of outperforming, validated by third-party audits, with stocks rated #1 producing an average annual return of +25% since the year 1988. Over the past month, the Zacks Consensus EPS estimate has shifted 0.56% downward. Johnson & Johnson is holding a Zacks Rank of #3 (Hold) right now.

With respect to valuation, Johnson & Johnson is currently being traded at a Forward P/E ratio of 23.58. This valuation marks a premium compared to its industry average Forward P/E of 18.12.

Also, we should mention that JNJ has a PEG ratio of 2.61. 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. Large Cap Pharmaceuticals stocks are, on average, holding a PEG ratio of 2.75 based on yesterday's closing prices.

The Large Cap Pharmaceuticals industry is part of the Medical sector. This industry currently has a Zacks Industry Rank of 159, which puts it in the bottom 36% of all 250+ industries.

The Zacks Industry Rank evaluates the power of our distinct industry groups by determining the average Zacks Rank of the individual stocks forming the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Don't forget to use Zacks.com to keep track of all these stock-moving metrics, and others, in the upcoming trading sessions.

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This article originally published on Zacks Investment Research (zacks.com).

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