Merck (MRK) Gains But Lags Market: What You Should Know

Zacks Equity Research
·3 min read

In the latest trading session, Merck (MRK) closed at $73.13, marking a +1.33% move from the previous day. The stock lagged the S&P 500's daily gain of 1.95%. Elsewhere, the Dow gained 1.85%, while the tech-heavy Nasdaq added 1.55%.

Heading into today, shares of the pharmaceutical company had lost 5.08% over the past month, outpacing the Medical sector's loss of 6.76% and lagging the S&P 500's loss of 2.45% in that time.

Wall Street will be looking for positivity from MRK as it approaches its next earnings report date. This is expected to be April 29, 2021. On that day, MRK is projected to report earnings of $1.68 per share, which would represent year-over-year growth of 12%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $12.85 billion, up 6.58% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $6.56 per share and revenue of $52.28 billion. These totals would mark changes of +10.44% and +8.94%, respectively, from last year.

Investors should also note any recent changes to analyst estimates for MRK. These revisions help to show the ever-changing nature of near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. 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 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 7.74% higher. MRK currently has a Zacks Rank of #3 (Hold).

Investors should also note MRK's current valuation metrics, including its Forward P/E ratio of 11.01. This valuation marks a discount compared to its industry's average Forward P/E of 12.63.

It is also worth noting that MRK currently has a PEG ratio of 1.82. 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. The Large Cap Pharmaceuticals industry currently had an average PEG ratio of 1.86 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 195, which puts it in the bottom 24% 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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