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Merck (MRK) Advances But Underperforms Market: Key Facts

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In the latest trading session, Merck (MRK - Free Report) closed at $118.45, marking a +0.84% move from the previous day. This change lagged the S&P 500's 1.01% gain on the day. Meanwhile, the Dow gained 0.55%, and the Nasdaq, a tech-heavy index, added 1.13%.

Shares of the pharmaceutical company have appreciated by 3.2% over the course of the past month, underperforming the Medical sector's gain of 4.91% and outperforming the S&P 500's gain of 2.5%.

Analysts and investors alike will be keeping a close eye on the performance of Merck in its upcoming earnings disclosure. In that report, analysts expect Merck to post earnings of $1.72 per share. This would mark a year-over-year decline of 19.25%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $16.48 billion, up 3.24% from the year-ago period.

Regarding the entire year, the Zacks Consensus Estimates forecast earnings of $8.13 per share and revenue of $64.14 billion, indicating changes of +438.41% and +6.69%, respectively, compared to the previous year.

Any recent changes to analyst estimates for Merck should also be noted by investors. These latest adjustments often mirror the shifting dynamics of short-term business patterns. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Our research suggests that these changes in estimates have a direct relationship with upcoming stock price performance. To utilize this, we have created the Zacks Rank, a proprietary model that integrates these estimate changes and provides a functional rating system.

The Zacks Rank system, spanning from #1 (Strong Buy) to #5 (Strong Sell), boasts an impressive track record of outperformance, audited externally, with #1 ranked stocks yielding an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 0.76% lower. At present, Merck boasts a Zacks Rank of #3 (Hold).

In terms of valuation, Merck is currently trading at a Forward P/E ratio of 14.44. This expresses a discount compared to the average Forward P/E of 16.24 of its industry.

We can additionally observe that MRK currently boasts a PEG ratio of 1.6. The PEG ratio bears resemblance to the frequently used P/E ratio, but this parameter also includes the company's expected earnings growth trajectory. MRK's industry had an average PEG ratio of 1.71 as of yesterday's close.

The Large Cap Pharmaceuticals industry is part of the Medical sector. This group has a Zacks Industry Rank of 95, putting it in the top 38% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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