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Merck (MRK) Weak In Early Morning 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 laggard 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 $607.1 million.
  • MRK traded 31,000 shares today in the pre-market hours as of 8:30 AM.
  • MRK is down 2% today from Friday'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 3.6%. MRK has a PE ratio of 32.8. 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 14.2 million shares per day over the past 30 days. Merck has a market cap of $142.6 billion and is part of the health care sector and drugs industry. The stock has a beta of 0.53 and a short float of 0.9% with 2.05 days to cover. Shares are up 20.6% year-to-date as of the close of trading on Friday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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, good cash flow from operations, expanding profit margins and increase in stock price during the past year. 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, 0.56, 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.
  • Net operating cash flow has increased to $3,949.00 million or 25.80% when compared to the same quarter last year. Despite an increase in cash flow, MERCK & CO's average is still marginally south of the industry average growth rate of 30.08%.
  • The gross profit margin for MERCK & CO is currently very high, coming in at 78.29%. 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, the net profit margin of 10.18% trails the industry average.
  • MERCK & CO's earnings per share declined by 32.1% 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 ($3.50 versus $2.00).
  • MRK, with its decline in revenue, slightly underperformed the industry average of 2.5%. Since the same quarter one year prior, revenues slightly dropped by 4.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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