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Merck (MRK) Strong In Pre-Market Trading

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Merck ( MRK) as a pre-market leader candidate. In addition to specific proprietary factors, Trade-Ideas identified Merck as such a stock due to the following factors:

  • MRK has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $740.7 million.
  • MRK traded 57,011 shares today in the pre-market hours as of 8:23 AM.
  • MRK is up 2.1% today from yesterday's close.

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More details on MRK:

Merck & Co., Inc. provides various health solutions through its prescription medicines, vaccines, biologic therapies, animal health, and consumer care products worldwide. The stock currently has a dividend yield of 3.8%. MRK has a PE ratio of 15.6. Currently there are 5 analysts that rate Merck a buy, 1 analyst rates it a sell, and 8 rate it a hold.

The average volume for Merck has been 13.3 million shares per day over the past 30 days. Merck has a market cap of $132.4 billion and is part of the health care sector and drugs industry. The stock has a beta of 0.55 and a short float of 1.1% with 2.05 days to cover. Shares are up 10.1% year to date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Merck as a buy. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:

  • The current debt-to-equity ratio, 0.59, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.41, which illustrates the ability to avoid short-term cash problems.
  • The gross profit margin for MERCK & CO is currently very high, coming in at 79.48%. Regardless of MRK's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, MRK's net profit margin of 8.22% is significantly lower than the industry average.
  • MERCK & CO's earnings per share declined by 48.3% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, MERCK & CO reported lower earnings of $2.00 versus $2.03 in the prior year. This year, the market expects an improvement in earnings ($3.47 versus $2.00).
  • MRK, with its decline in revenue, underperformed when compared the industry average of 2.6%. Since the same quarter one year prior, revenues fell by 10.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • In its most recent trading session, MRK has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.

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