Merck & Co Inc. Earnings Cheat Sheet: Margin Expansion Driven by Revenue Growth, Profit Rises

S&P 500 (NYSE:SPY) component Merck & Co Inc. (NYSE:MRK) reported its results for the third quarter. Merck is a global research-driven company that develops and manufactures a range of innovative pharmaceutical products to improve human and animal health.

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Merck Earnings Cheat Sheet for the Third Quarter

Results: Net income for the drug manufacturer rose to $1.69 billion (55 cents per share) vs. $341.6 million (11 cents per share) in the same quarter a year earlier. This is a more than fourfold rise from the year earlier quarter.

Revenue: Rose 8.1% to $12.02 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: MRK reported adjusted net income of 94 cents per share. By that measure, the company beat the mean estimate of 91 cents per share. It beat the average revenue estimate of $11.61 billion.

Quoting Management: “Merck once again delivered a strong quarter,” said Kenneth C. Frazier, president and chief executive officer, “coupling top line growth and strong expense management to report an 11 percent increase to the bottom line. Going forward, Merck will continue to implement our growth strategy, while transforming the way we operate our business.”

Key Stats:

Revenue has risen the past four quarters. Revenue increased 7.1% to $12.15 billion in the second quarter. The figure rose 1.4% in the first quarter from the year earlier and climbed 19.8% in the fourth quarter of the last fiscal year from the year-ago quarter.

The company beat estimates last quarter after being in line with expectations in the second quarter with net income of 95 cents per share.

Gross margins grew 1.5 percentage points to 63.8%. The growth seemed to be driven by increased revenue, as the figure rose 8.1% from the year earlier quarter while costs rose 3.8%.

Looking Forward: Over the last 30 days, analysts have not been optimistic about the company’s next quarter performance. The average estimate for the fourth quarter is now 95 cents per share, down from 96 cents. For the fiscal year, the average estimate has moved down from $3.74 a share to $3.73 over the last ninety days.

Competitors to Watch: Johnson & Johnson (NYSE:JNJ), Pfizer Inc. (NYSE:PFE), Bristol Myers Squibb Co. (NYSE:BMY), GlaxoSmithKline plc (NYSE:GSK), Sanofi-Aventis SA (NYSE:SNY), Roche Holding Ltd. (RHHBY), Eli Lilly & Co. (NYSE:LLY), Abbott Laboratories (NYSE:ABT), Teva Pharmaceutical Industries Ltd (NASDAQ:TEVA), and Novartis AG (NYSE:NVS).

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(Source: Xignite Financials)

 

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