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

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:

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, expanding profit margins, solid stock price performance, growth in earnings per share and good cash flow from operations. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

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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 1.23, which illustrates the ability to avoid short-term cash problems.
  • The gross profit margin for MERCK & CO is currently very high, coming in at 89.02%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of 16.61% trails the industry average.
  • The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
  • MERCK & CO has improved earnings per share by 9.6% 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 reported lower earnings of $1.46 versus $2.00 in the prior year. This year, the market expects an improvement in earnings ($3.46 versus $1.46).
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 5.2%. Since the same quarter one year prior, revenues slightly dropped by 3.8%. The declining revenue has not hurt the company's bottom line, with increasing 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 $163.3 billion and is part of the health care sector and drugs industry. Shares are up 11.6% year-to-date as of the close of trading on Friday.

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McDonald's Corp:

McDonald's (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, largely solid financial position with reasonable debt levels by most measures, expanding profit margins, good cash flow from operations 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.

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Highlights from the ratings report include:
  • MCD's revenue growth has slightly outpaced the industry average of 6.2%. Since the same quarter one year prior, revenues slightly increased by 1.4%. 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 debt-to-equity ratio is somewhat low, currently at 0.86, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.28, which illustrates the ability to avoid short-term cash problems.
  • 43.68% is the gross profit margin for MCDONALD'S CORP which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 17.98% is above that of the industry average.
  • Net operating cash flow has increased to $1,907.30 million or 13.06% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -20.46%.
  • MCDONALD'S CORP' earnings per share from the most recent quarter came in slightly below the year earlier quarter. 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, 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 ($5.75 versus $5.56).

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 $101.3 billion and is part of the services sector and leisure industry. Shares are up 6.3% year-to-date as of the close of trading on Friday.

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MetLife Inc:

MetLife (NYSE: MET) 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 impressive record of earnings per share growth, compelling growth in net income, solid stock price performance, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

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Highlights from the ratings report include:
  • METLIFE INC has improved earnings per share by 31.0% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, METLIFE INC increased its bottom line by earning $2.91 versus $1.09 in the prior year. This year, the market expects an improvement in earnings ($5.66 versus $2.91).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Insurance industry average. The net income increased by 34.7% when compared to the same quarter one year prior, rising from $986.00 million to $1,328.00 million.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
  • MET, with its decline in revenue, underperformed when compared the industry average of 8.1%. Since the same quarter one year prior, revenues slightly dropped by 3.3%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • Despite currently having a low debt-to-equity ratio of 0.37, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further.

MetLife, Inc., through its subsidiaries, provides insurance, annuities, and employee benefit programs in the United States, Japan, Latin America, Asia, Europe, and the Middle East. MetLife has a market cap of $55.8 billion and is part of the financial sector and insurance industry. Shares are down 8.3% year-to-date as of the close of trading on Friday.

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