Merck Third Quarter Earnings on Deck

S&P 500 (NYSE:SPY) component Merck & Co (NYSE:MRK) will unveil its latest earnings on Friday, October 26, 2012. Merck is a global research-driven company that develops and manufactures a range of innovative pharmaceutical products to improve human and animal health.

Merck & Co Earnings Preview Cheat Sheet

Wall St. Earnings Expectations: The average analyst estimate is for net income of 93 cents per share, a decline of 1.1% from the company’s actual earnings for the year-ago quarter. During the past three months, the average estimate has moved down from 96 cents. Between one and three months ago, the average estimate moved down. It has risen from 92 cents during the last month. Analysts are projecting profit to rise by 1.1% compared to last year’s $3.81.

Past Earnings Performance: The company has beaten estimates the last four quarters and is coming off a quarter where it topped forecasts by 4 cents, reporting profit of $1.05 per share against a mean estimate of net income of $1.01 per share.

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A Look Back: In the second quarter, profit fell 11.4% to $1.79 billion (58 cents a share) from $2.02 billion (65 cents a share) the year earlier, but exceeded analyst expectations. Revenue rose 1.3% to $12.31 billion from $12.15 billion.

Stock Price Performance: Between August 24, 2012 and October 22, 2012, the stock price had risen $3.36 (7.8%), from $43.12 to $46.48. The stock price saw one of its best stretches over the last year between June 1, 2012 and June 12, 2012, when shares rose for eight straight days, increasing 4.5% (+$1.67) over that span. It saw one of its worst periods between March 13, 2012 and March 22, 2012 when shares fell for eight straight days, dropping 1.8% (-69 cents) over that span.

Wall St. Revenue Expectations: Analysts are projecting a decline of 3.4% in revenue from the year-earlier quarter to $11.61 billion.

Key Stats:

On the top line, the company is looking to build on four-straight revenue increases heading into this earnings announcement. Revenue rose 8.1% in the third quarter of the last fiscal year, 1.7% in the fourth quarter of the last fiscal year and 1.3% in the first quarter before increasing again in the second quarter.

Analyst Ratings: With 10 analysts rating the stock a buy, none rating it a sell and seven rating the stock a hold, there are indications of a bullish stance by analysts.

Balance Sheet Analysis: The company’s current ratio of assets to liabilities came in at 2.11 last quarter. Having a ratio above 2:1 is usually considered a good indicator of a company’s liquidity and ability to meet creditor demands. The company improved this liquidity measure from 2.07 in the first quarter to the last quarter driven in part by an increase in current assets. Current assets increased 3.8% to $35.64 billion while liabilities rose by 2% to $16.91 billion.

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(Company fundamentals by Xignite Financials. Earnings estimates provided by Zacks)

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