In the latest trading session, Johnson & Johnson (JNJ) closed at $179.46, marking a -0.09% move from the previous day. This move lagged the S&P 500’s daily gain of 1.99%. Meanwhile, the Dow gained 1.61%, and the Nasdaq, a tech-heavy index, added 0.06%.
Investors will be hoping for strength from Johnson & Johnson as it approaches its next earnings release. On that day, Johnson & Johnson is projected to report earnings of $2.59 per share, which would represent year-over-year growth of 4.44%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $23.99 billion, up 2.93% from the year-ago period.
JNJ’s full-year Zacks Consensus Estimates are calling for earnings of $10.23 per share and revenue of $96.62 billion. These results would represent year-over-year changes of +4.39% and +3.04%, respectively.
Investors should also note any recent changes to analyst estimates for Johnson & Johnson. These revisions help to show the ever-changing nature of near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company’s business and profitability.
The research shows that these estimate changes are directly correlated with near-term stock prices. Here is a breakdown of the Zacks Rank system to capitalize on this phenomenon. The system takes these estimate changes into account and delivers a clear, actionable rating model.
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 has moved 0.33% higher. Johnson & Johnson currently has a Zacks Rank of №3 (Hold).
Digging into valuation, Johnson & Johnson currently has a Forward P/E ratio of 17.55. This valuation marks a premium compared to its industry’s average Forward P/E of 13.83.
JNJ has a PEG ratio of 3.55. 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 was holding an average PEG ratio of 2.18 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 90, which puts it in the top 36% of all 250+ industries.
The Zacks Industry Rank gauges the strength of the industry groups by measuring the average Zacks Rank of the individual stocks within the groups. The research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.