Merck & Co Inc. Earnings: Margins Expand For Fifth Straight Quarter

S&P 500 (NYSE:SPY) component Merck & Co Inc. (NYSE:MRK) reported its results for the fourth 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 Fourth Quarter

Results: Reported a profit of $1.51 billion (49 cents per diluted share) in the quarter. Merck & Co Inc. had a net loss of $531.7 million or a loss 17 cents per share in the year earlier quarter.

Revenue: Rose 1.7% to $12.29 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: Merck & Co Inc. reported adjusted net income of 97 cents per share. By that measure, the company beat the mean estimate of 95 cents per share. Analysts were expecting revenue of $12.53 billion.

Quoting Management: “We are positioning Merck to perform well by advancing and growing our innovative pipeline, meeting the evolving needs of customers around the world and achieving a more efficient operating model,” said Kenneth C. Frazier, chairman and chief executive officer of Merck. “We closed out 2011 with a high-quality fourth quarter by growing the top and bottom lines. Our overall performance for the year confirms our ability to achieve strong operating results while investing for the longer term. As we begin 2012 and look ahead, we are optimistic about our underlying business, our current momentum and the early success of our strategy.”

Key Stats:

Last quarter marked the fifth consecutive quarter of gross margins expanding as the company’s gross margin expanded 2.7 percentage points to 66% from the year earlier quarter. Over that span, margins have grown on average 6.3 percentage points per quarter on a year-over-year basis.

Revenue has risen the past four quarters. Revenue increased 8.1% to $12.02 billion in the third quarter. The figure rose 7.1% in the second quarter from the year earlier and climbed 1.4% in the first quarter from the year-ago quarter.

The company has now beaten estimates the last two quarters. In the third quarter, it topped expectations with net income of 94 cents versus a mean estimate of net income of 91 cents per share.

Looking Forward: Analysts appear increasingly negative about the company’s results for the next quarter. The average estimate for the first quarter of the next fiscal year has moved down from $1.02 a share to $1.01 over the last thirty days. The average estimate for the fiscal year has risen to $3.76 per share from $3.75 in the past month.

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

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To contact the reporter on this story: Derek Hoffman at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com