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Merck (MRK) Stock Sinks As Market Gains: What You Should Know

In the latest trading session, Merck (MRK) closed at $79.41, marking a -0.58% move from the previous day. This change lagged the S&P 500's daily gain of 0.84%. Elsewhere, the Dow gained 0.03%, while the tech-heavy Nasdaq added 2.51%.

Heading into today, shares of the pharmaceutical company had gained 4.79% over the past month, outpacing the Medical sector's gain of 4.71% and the S&P 500's gain of 3.73% in that time.

MRK will be looking to display strength as it nears its next earnings release, which is expected to be July 31, 2020. The company is expected to report EPS of $1.14, down 12.31% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $10.92 billion, down 7.17% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $5.32 per share and revenue of $47.71 billion, which would represent changes of +2.5% and +1.86%, respectively, from the prior year.

Investors might also notice recent changes to analyst estimates for MRK. 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 company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

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. The Zacks Consensus EPS estimate has moved 0.13% higher within the past month. MRK is currently sporting a Zacks Rank of #3 (Hold).

Valuation is also important, so investors should note that MRK has a Forward P/E ratio of 15.02 right now. This represents a discount compared to its industry's average Forward P/E of 15.85.

We can also see that MRK currently has a PEG ratio of 2.23. 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 2.21 as of yesterday's close.

The Large Cap Pharmaceuticals industry is part of the Medical sector. This group has a Zacks Industry Rank of 41, putting it in the top 17% 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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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