Facebook Falls, Merck and Philip Morris Rise on Earnings Releases

With earnings season in full swing, more than a handful of big companies are reporting each day.

Although earnings reports often move the major indices, that wasn't the case Thursday. The Dow Jones Industrial Average closed at 19,884.91, down 6.1 points or 0.03%; the Nasdaq Composite dropped 6.45 points or 0.11%; and the S&P 500 rose 1.3 points or 0.06%. 

But just because the major indices didn't experience big moves, doesn't mean that wasn't the case for some individual stocks.

Here are three.

1. Facebook (FB)   
Shares of Facebook declined 1.75% Thursday, though they are up Friday, after the company posted fourth-quarter revenue of $8.81 billion and adjusted earnings of $1.41 a share. Analysts had expected revenue of $8.5 billion and adjusted earnings of $1.31 a share.

Monthly active users came in at 1.86 billion, while daily active users hit 1.23 billion, both above the 1.84 billion and 1.21 billion, respectively that analysts were expecting.

Facebook has beaten estimates on adjusted earnings for 13 straight quarters.

The stock fell on concerns about slowing growth rates.

Snapchat is showing massive growth at a time when Facebook is beginning to slow, and its Instagram unit isn't keeping up with Snapchat. Investors never like to see growth rates slow, especially when a competitor is rapidly growing.

Although Facebook investors shouldn't be too concerned, they should note what is happening, and if it continues to occur or if growth comes to a halt altogether on the company's platform, they may want to head for the hills.

Facebook is a holding in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio. See how Cramer rates the stock here. Want to be alerted before Cramer buys or sells FB? Learn more now.

2. Merck (MRK)
With all the political talk about how fast drug prices have risen, one might think that a drug company would be posting massive growth rates, but Merck proved that theory wrong.

Merck reported fourth-quarter earnings of 89 cents a share, a penny above analysts estimates but 4.3% lower than a year earlier. Revenue came in at $10.12 billion, below the $10.2 billion expected and a 1% drop from a year earlier.

Currency exchange and weak pharmaceutical sales hurt the company.

Drugs coming off patent protection continue to take a toll on Merck, but new drugs for cancer and hepatitis C helped offset some of the decline. One could argue that President Donald Trump won't attack the drug companies over pricing due to his rhetoric of reducing regulations.

However, investors need to keep an eye on what is being said and how the pricing debate plays out. Merck's 3% move higher after reporting pushed the stock within reach of its 52-week high, so investors may want to wait for a pullback before jumping on board.

3. Philip Morris (PM)  
Shares of Philip Morris popped nicely, up 3.36% Thursday.

The international tobacco company reported fourth-quarter revenue of $7 billion, well above the consensus estimate of $6.39 billion and adjusted earnings of $1.10 a share, a penny below estimates. But earnings grew 36% from a year earlier as sales jumped mainly in Asia and Europe.

Cigarette shipments fell 4.4%, due to a decline in total market share in more developed nations, though it increased in developing nations. Ecigarettes could have something to do with this, as they are more likely to be used in developed countries, as opposed to developing nations.

Philip Morris did see an increase from 62 million Heat Stick units shipped last year to 3.7 billion shipped in the fourth quarter. The "heat-not-burn" products or ecigarettes certainly look to be a growth market.

Although some investors may shun the idea of owning a tobacco stock, the fact remains that the sector has been hands down the best one to own over the past 50 years.

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The author is an independent contributor who at the time of publication owned shares of FB.

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