Merck Earnings: Expands Margins AGAIN, TOPS Analyst Estimates

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

Investing Insights: Is TV the Next Bullish Catalyst for Apple’s Stock?

Merck & Co Inc. Earnings Cheat Sheet

Results: Net income for the large-cap pharmaceutical fell to $1.79 billion (58 cents per share) vs. $2.02 billion (65 cents per share) a year earlier. This is a decline of 11.4% from the year-earlier quarter.

Revenue: Rose 1.3% to $12.31 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: Merck & Co Inc. reported adjusted net income of $1.05 per share. By that measure, the company beat the mean estimate of $1.01 per share. Analysts were expecting revenue of $12.17 billion.

Quoting Management: “This quarter we delivered strong operational performance by focusing on growth and execution. We achieved top- and bottom-line growth by advancing our core strategy and maintaining momentum across our businesses,” said Kenneth C. Frazier, chairman and chief executive officer of Merck. “The company remains focused on translating cutting-edge science into medically important products. We’re seeing significant progress in the pipeline this year, and we expect six major filings over the next 18 months, including suvorexant for insomnia and odanacatib for osteoporosis. This focus on innovation and execution will drive long-term shareholder value.”

Key Stats:

Last quarter, the company’s gross margin expanded 1.9 percentage points from the year-earlier quarter to 66.6%. It was the fifth consecutive quarter of gross-margin growth. Over that span, margins have grown, on average, 2.3 percentage points per quarter on a year-over-year basis.

The company has now surpassed analyst estimates for four quarters in a row. It beat the mark by 2 cents in the first quarter, by 2 cents in the fourth quarter of the last fiscal year, and by 3 cents in the third quarter of the last fiscal year.

Revenue has risen the past four quarters. Revenue increased 1.3% to $11.73 billion in the first quarter. The figure rose 1.7% in the fourth quarter of the last fiscal year from the year earlier and climbed 8.1% in the third quarter of the last fiscal year from the year-ago quarter.

Looking Forward: For next quarter, analysts have a more positive outlook about the company’s expected results. The average estimate for the third quarter is 96 cents per share, up from 93 cents ninety days ago. The average estimate for the fiscal year is $3.83 per share, a rise from $3.80 ninety days ago.

Stocks with improving earnings metrics are worthy of your extra attention. In fact, “E = Earnings Are Increasing Quarter-Over-Quarter” is a core component of our CHEAT SHEET investing framework for this very reason. Don’t waste another minute — click here and get our CHEAT SHEET stock picks now.

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

Don’t Miss These Hot Additional Stories:

Here’s More EVIDENCE Facebook and Zynga Don’t Give a DAMN About Shareholders

Is Bank Of America Stock a BUY or SCREAMING SELL?

American Express Stock: Buy, Sell, or Stay Away?