Editor's Note: 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.
NEW YORK (
) 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 revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance, good cash flow from operations 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:
- MRK's revenue growth has slightly outpaced the industry average of 5.9%. 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.
- The current debt-to-equity ratio, 0.34, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, MRK has a quick ratio of 1.51, which demonstrates the ability of the company to cover short-term liquidity needs.
- Compared to its closing price of one year ago, MRK's share price has jumped by 34.00%, 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.
- Net operating cash flow has slightly increased to $2,920.00 million or 2.38% when compared to the same quarter last year. In addition, MERCK & CO has also modestly surpassed the industry average cash flow growth rate of 1.30%.
- The gross profit margin for MERCK & CO is currently very high, coming in at 81.40%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 14.60% trails the industry average.
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 19.7, below the average drugs industry P/E ratio of 19.8 and above the S&P 500 P/E ratio of 17.7. Merck has a market cap of $131.14 billion and is part of the
industry. Shares are up 14.4% year to date as of the close of trading on Thursday.
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--Written by a member of TheStreet Ratings Staff.
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