Merck Second Quarter Earnings Sneak Peek

S&P 500 (NYSE:SPY) component Merck & Co (NYSE:MRK) will unveil its latest earnings on Friday, July 27, 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 $1.01 per share, a rise of 6.3% from the company’s actual earnings for the year-ago quarter. During the past three months, the average estimate has moved down from $1.03. Between one and three months ago, the average estimate moved down. It also has dropped from $1.02 during the last month. Analysts are projecting profit to rise by 1.6% compared to last year’s $3.83.

Past Earnings Performance: Last quarter, the company reported profit of 99 cents per share versus a mean estimate of net income of. The company has beaten estimates for the past three quarters.

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A Look Back: In the first quarter, profit rose 66.6% to $1.74 billion (56 cents a share) from $1.04 billion (34 cents a share) the year earlier, exceeding analyst expectations. Revenue rose 1.3% to $11.73 billion from $11.58 billion.

Stock Price Performance: Between May 24, 2012 and July 23, 2012, the stock price had risen $5.67 (15.1%), from $37.60 to $43.27. 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 July 22, 2011 and August 4, 2011 when shares fell for 10 straight days, dropping 12.7% (-$4.58) over that span.

Analyst Ratings: With 12 analysts rating the stock a buy, none rating it a sell and six rating the stock a hold, there are indications of a bullish stance by analysts.

Key Stats:

On the top line, the company is looking to build on four-straight revenue increases heading into this earnings announcement. Revenue rose 7.1% in the second quarter of the last fiscal year, 8.1% in the third quarter of the last fiscal year and 1.7% in the fourth quarter of the last fiscal year before increasing again in the first quarter.

Balance Sheet Analysis: The company’s current ratio of assets to liabilities came in at 2.07 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 2.04 in the fourth quarter of the last fiscal year to the last quarter driven in part by an increase in current assets. Current assets increased 3.5% to $34.34 billion while liabilities rose by 2.1% to $16.58 billion.

Wall St. Revenue Expectations: Analysts predict a rise of 0.2% in revenue from the year-earlier quarter to $12.17 billion.

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

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