E = Earnings Are Mixed Quarter-Over-Quarter
Earnings and revenue growth rates should be rising so that a stock price can rise. After all, most equity valuation models incorporate earnings and revenue growth rates into the value of an equity. What do the last four quarterly earnings and revenue growth figures for Merck look like? The last four quarterly earnings growth (Y-O-Y) rates have been: -37.5, 1.82, -10.77, and 64.71 percent while the last four revenue growth (Y-O-Y) rates have all been: -4.53, -4.44, 1.32, and 1.3 percent. Merck has displayed declining earnings and revenue growth rates.
What did the street think about these numbers? The last four quarterly earnings announcement reactions help gauge investor sentiment on Merck’s stock. The last four quarters have seen next trading session returns of -3.28, -0.32, 4.07, and -0.02 percent. The street has not been too happy with Merck’s earnings reports.
E = Excellent Relative Performance Versus Peers and Sector
How has Merck stock done relative to its peers and sector? Year-to-date, the stock is returning 7.87 percent while its competitors, GlaxoSmithKline (NYSE:GSK), Novartis (NYSE:NVS), Pfizer (NYSE:PFE), and sector are returning 1.12, 7.46, 8.14, and 10.59 percent respectively. Merck has been one of the relative performance leaders of its sector.
Merck engages in a healthcare field that is seeing drastic changes in the coming years. Due to the increasing life expectancy of people worldwide, the company is in an area that can see significant profits. On the price chart, the stock hasn’t performed too well but it looks to be getting ready to move higher. However, this move many not be supported by the disappointing earnings and revenue growth rates. Lastly, relative to its peers and sector, the stock has been a performance leader. So, WAIT AND SEE what Merck does in the coming quarter.
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