3 Stocks Reiterated As A Buy: MDLZ, MRK, MCD

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.

NEW YORK ( TheStreet) -- TheStreet Ratings team reiterated 3 stocks with a buy rating on Monday based on 32 different data factors including general market action, fundamental analysis and technical indicators. The in-depth analysis of these ratings decisions goes as follows:

Mondelez International Inc:

Mondelez International (Nasdaq: MDLZ) has been reiterated by TheStreet Ratings as a buy with a ratings score of B-. According to TheStreet Ratings team: The company's strengths can be seen in multiple areas, such as its compelling growth in net income, expanding profit margins, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and increase in stock price during the past year. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.

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Highlights from the ratings report include:
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Food Products industry. The net income increased by 230.7% when compared to the same quarter one year prior, rising from $534.00 million to $1,766.00 million.
  • 39.09% is the gross profit margin for MONDELEZ INTERNATIONAL INC which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 18.61% is above that of the industry average.
  • Net operating cash flow has significantly increased by 198.16% to $5,212.00 million when compared to the same quarter last year. In addition, MONDELEZ INTERNATIONAL INC has also vastly surpassed the industry average cash flow growth rate of 50.07%.
  • The current debt-to-equity ratio, 0.53, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that MDLZ's debt-to-equity ratio is low, the quick ratio, which is currently 0.56, displays a potential problem in covering short-term cash needs.
  • MONDELEZ INTERNATIONAL INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from 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, MONDELEZ INTERNATIONAL INC increased its bottom line by earning $1.29 versus $0.87 in the prior year. This year, the market expects an improvement in earnings ($1.71 versus $1.29).

Mondelez International, Inc., through its subsidiaries, manufactures and markets snack food and beverage products worldwide. Mondelez International has a market cap of $59.0 billion and is part of the consumer goods sector and food & beverage industry. Shares are down 2.8% year-to-date as of the close of trading on Friday.

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Merck & Co Inc:

Merck (NYSE: MRK) has been reiterated by TheStreet Ratings as a buy with a ratings score of A. According to TheStreet Ratings team: 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 solid stock price performance. 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:
  • The current debt-to-equity ratio, 0.50, 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 1.38, which illustrates the ability to avoid short-term cash problems.
  • Net operating cash flow has significantly increased by 67.27% to $3,026.00 million when compared to the same quarter last year. In addition, MERCK & CO has also vastly surpassed the industry average cash flow growth rate of 11.17%.
  • The gross profit margin for MERCK & CO is currently very high, coming in at 76.93%. 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 6.89% trails the industry average.
  • MERCK & CO's earnings per share declined by 13.3% 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 two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, MERCK & CO reported lower earnings of $1.46 versus $2.00 in the prior year. This year, the market expects an improvement in earnings ($3.44 versus $1.46).
  • MRK, with its decline in revenue, slightly underperformed the industry average of 0.6%. Since the same quarter one year prior, revenues slightly dropped by 3.5%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.

Merck & Co., Inc. provides various health solutions through its prescription medicines, vaccines, biologic therapies, animal health, and consumer care products worldwide. Merck has a market cap of $164.2 billion and is part of the health care sector and drugs industry. Shares are up 11.7% year-to-date as of the close of trading on Friday.

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McDonald's Corporation:

McDonald's Corporation (NYSE: MCD) has been reiterated by TheStreet Ratings as a buy with a ratings score of A. According to TheStreet Ratings team: The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, growth in earnings per share, increase in net income and expanding profit margins. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

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Highlights from the ratings report include:
  • MCD's revenue growth has slightly outpaced the industry average of 3.8%. Since the same quarter one year prior, revenues slightly increased by 2.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Net operating cash flow has slightly increased to $1,873.50 million or 1.26% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -31.17%.
  • MCDONALD'S CORP's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, MCDONALD'S CORP increased its bottom line by earning $5.56 versus $5.36 in the prior year. This year, the market expects an improvement in earnings ($5.82 versus $5.56).
  • The net income growth from the same quarter one year ago has exceeded that of the Hotels, Restaurants & Leisure industry average, but is less than that of the S&P 500. The net income increased by 0.1% when compared to the same quarter one year prior, going from $1,396.10 million to $1,397.00 million.
  • 44.43% is the gross profit margin for MCDONALD'S CORP which we consider to be strong. Regardless of MCD's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, MCD's net profit margin of 19.69% compares favorably to the industry average.

McDonald's Corporation franchises and operates McDonald's restaurants in the United States, Europe, the Asia/Pacific, the Middle East, Africa, Canada, and Latin America. The company's restaurants offer various food items, soft drinks, coffee, and other beverages, as well as breakfast menus. McDonald's has a market cap of $98.4 billion and is part of the services sector and leisure industry. Shares are up 2.3% year-to-date as of the close of trading on Friday.

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