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Merck Second Quarter Earnings Preview
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Shares of Merck (NYSE:MRK) have risen 11% since April 26, 2012 to close at $42.69 on July 24, 2012. The company is looking to keep that trend going when it releases its second quarter results on Friday, July 27, 2012.
In most situations, when earnings do not meet analyst estimates, a business' stock price will tend to drop. On the other hand, when actual earnings beat estimates by a significant amount, the share price will likely surge. SEE: 5 Tricks Companies Use During Earnings Season
What to Expect: The consensus estimate for Merck's earnings is $1.01 per share, up 6.3% from a year ago when the company reported earnings of 95 cents per share.
Whereas the consensus estimate was $1.03 three months ago, it has since fallen. For the fiscal year, analysts are projecting earnings of $3.83 per share.
Revenue is expected to exceed last year's figure of $12.15 billion by 0.2% and come in at $12.17 billion for the quarter. The anticipated revenue for the fiscal year is $47.22 billion.
Company Performance: Revenue has risen for four consecutive quarters now. It increased 1.3% to $11.73 billion in the first quarter. Prior to that, the figure rose 1.7% in the fourth quarter of the last fiscal year, 8.1% in the third quarter of the last fiscal year and 7.1% in the second quarter of the last fiscal year.
MRK has a P/E ratio of 19.0, high compared to the industry average of 13.5. This could mean that the market is expecting big things over the next few months or years. One of the most important estimates of stock market valuation is the price/earnings ratio (P/E ratio). To determine the P/E ratio, an investor divides the market price of the stock by the earnings-per-share (EPS) of the stock. SEE: Can Investors Trust the P/E Ratio?
Currently, Merck's stock is on a downward trend. The share price has fallen $1.50 since July 17, 2012.
The Competition: Merck is a global research-driven company that develops and manufactures a range of innovative pharmaceutical products to improve human and animal health. The majority of analysts (12 of 18) rate Merck a buy. They have grown a bit more optimistic about the stock, as the number of buy ratings has inched up over the past three months.
The company's closest competitor in the biotechnology and drugs industry is Johnson & Johnson (JNJ). Analysts are less optimistic about Merck than about Johnson & Johnson. Fifteen out of 23 analysts rate the latter a buy.
In most situations, when earnings do not meet analyst estimates, a business' stock price will tend to drop. On the other hand, when actual earnings beat estimates by a significant amount, the share price will likely surge. SEE: 5 Tricks Companies Use During Earnings Season
What to Expect: The consensus estimate for Merck's earnings is $1.01 per share, up 6.3% from a year ago when the company reported earnings of 95 cents per share.
Whereas the consensus estimate was $1.03 three months ago, it has since fallen. For the fiscal year, analysts are projecting earnings of $3.83 per share.
Revenue is expected to exceed last year's figure of $12.15 billion by 0.2% and come in at $12.17 billion for the quarter. The anticipated revenue for the fiscal year is $47.22 billion.
Company Performance: Revenue has risen for four consecutive quarters now. It increased 1.3% to $11.73 billion in the first quarter. Prior to that, the figure rose 1.7% in the fourth quarter of the last fiscal year, 8.1% in the third quarter of the last fiscal year and 7.1% in the second quarter of the last fiscal year.
Currently, Merck's stock is on a downward trend. The share price has fallen $1.50 since July 17, 2012.
The Competition: Merck is a global research-driven company that develops and manufactures a range of innovative pharmaceutical products to improve human and animal health. The majority of analysts (12 of 18) rate Merck a buy. They have grown a bit more optimistic about the stock, as the number of buy ratings has inched up over the past three months.
The company's closest competitor in the biotechnology and drugs industry is Johnson & Johnson (JNJ). Analysts are less optimistic about Merck than about Johnson & Johnson. Fifteen out of 23 analysts rate the latter a buy.
by
Investopedia Staff
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