Merck & Co Inc Stock Buy Recommendation Reiterated (MRK)

NEW YORK (TheStreet) -- Merck (NYSE:MRK) has been reiterated by TheStreet Ratings as a buy with a ratings score of A+ . The company's strengths can be seen in multiple areas, such as its solid stock price performance, revenue growth and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

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Highlights from the ratings report include:

• Compared to its closing price of one year ago, MRK's share price has jumped by 33.46%, exceeding the performance of the broader market during that same time frame. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
• Despite its growing revenue, the company underperformed as compared with the industry average of 2.5%. Since the same quarter one year prior, revenues slightly increased by 1.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
• MERCK & CO's earnings per share declined by 10.8% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, MERCK & CO increased its bottom line by earning $2.03 versus $0.27 in the prior year. This year, the market expects an improvement in earnings ($3.81 versus $2.03).
• The gross profit margin for MERCK & CO is rather high; currently it is at 67.30%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, MRK's net profit margin of 14.60% compares favorably to the industry average.
• The change in net income from the same quarter one year ago has exceeded that of the Pharmaceuticals industry average, but is less than that of the S&P 500. The net income has decreased by 11.4% when compared to the same quarter one year ago, dropping from $2,024.00 million to $1,793.00 million.

Merck & Co., Inc. provides various health solutions through its prescription medicines, vaccines, biologic therapies, animal health, and consumer care products. The company has a P/E ratio of 20.1, below the average drugs industry P/E ratio of 20.4and above the S&P 500 P/E ratio of 17.7. Merck has a market cap of $133.83 billion and is part of the health care sector and drugs industry. Shares are up 16.7% year to date as of the close of trading on Wednesday.

You can view the full Merck Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

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