Merck Beats on Both Top and Bottom Lines

Just the facts, Fool.

Seth Jayson
Seth Jayson
Mar 5, 2013 at 12:00AM
Other

Merck (NYSE: MRK) filed its 10-K on Feb. 28. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q4), Merck beat expectations on revenues and beat slightly on earnings per share.

Compared to the prior-year quarter, revenue contracted. Non-GAAP earnings per share shrank. GAAP earnings per share dropped significantly.

Margins dropped across the board.

Revenue details
Merck booked revenue of $11.74 billion. The 14 analysts polled by S&P Capital IQ predicted revenue of $11.46 billion on the same basis. GAAP reported sales were the same as the prior-year quarter's.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $0.83. The 18 earnings estimates compiled by S&P Capital IQ predicted $0.81 per share. Non-GAAP EPS of $0.83 for Q4 were 14% lower than the prior-year quarter's $0.97 per share. GAAP EPS of $0.29 for Q4 were 41% lower than the prior-year quarter's $0.49 per share.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 64.9%, 240 basis points worse than the prior-year quarter. Operating margin was 19.7%, 400 basis points worse than the prior-year quarter. Net margin was 7.7%, 460 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $11.12 billion. On the bottom line, the average EPS estimate is $0.81.

Next year's average estimate for revenue is $46.25 billion. The average EPS estimate is $3.65.

Investor sentiment
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 2,690 members out of 2,901 rating the stock outperform, and 211 members rating it underperform. Among 755 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 718 give Merck a green thumbs-up, and 37 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Merck is outperform, with an average price target of $47.93.

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