Amgen's (Nasdaq:AMGN) stock price has risen 14.7% since July 20, 2012 to close at $89.20 on October 17, 2012. When the company releases its third quarter earnings on Tuesday, October 23, 2012, it will hope to keep this momentum going.
Earnings play an important role in measuring the appropriate valuation for a stock. Investors should be cautious if the company's stock price is high but it consistently has low earnings. SEE: How To Decode A Company's Earnings Reports
What to Expect: The consensus estimate for Amgen's earnings is $1.43 per share, up 3.6% from a year ago when the company reported earnings of $1.38 per share.
The consensus estimate, while unchanged in the past month, is down from $1.52 three months ago. For the fiscal year, analysts are projecting earnings of $6.22 per share.
Amgen is expected to beat last year's reported revenue of $3.94 billion and come in at $4.25 billion for the quarter. Amgen is expected to report revenue of $17.04 billion for the fiscal year.
Company Performance: These last four quarters have marked revenue growth. It rose 13.1% in the second quarter, 9.2% in the first quarter, 3.4% in the fourth quarter of the last fiscal year and 3.4% in the third quarter of the last fiscal year.
AMGN's P/E ratio is 19.1. A company's price/earnings ratio (P/E ratio) provides a measure of how expensive or cheap a stock is. A high or low P/E ratio is not good or bad in and of itself, but a company trading with a high P/E ratio must continue to post strong financial performance or its stock price is likely to fall. SEE: The P/E Ratio: A Good Market-Timing Indicator
The price is within 44 cents of its 52-week high of $89.64, which was set on October 17, 2012. Amgen's best recent streak was when its price gained $5.20 per share between October 12, 2012 and October 17, 2012.
The Competition: Amgen is a biotechnology medicines company that discovers, develops, manufactures, and markets medicines for grave illnesses. Most analysts (13 of 25) give Amgen a hold rating. They have become increasingly pessimistic about the stock, as the number of buy ratings has dropped slightly over the last three months.
The company's closest competitor in the biotechnology and drugs industry is Johnson & Johnson (JNJ). Analysts are less optimistic about Amgen than about Johnson & Johnson. Fourteen out of 22 analysts rate the latter a buy compared to 12 of 25 for the former.