The 10-second takeaway
For the quarter ended June 30 (Q2), Merck missed slightly on revenues and beat slightly on earnings per share.
Compared to the prior-year quarter, revenue dropped. Non-GAAP earnings per share dropped significantly. GAAP earnings per share dropped significantly.
Margins contracted across the board.
Merck recorded revenue of $11.01 billion. The 13 analysts polled by S&P Capital IQ expected to see revenue of $11.22 billion on the same basis. GAAP reported sales were 11% lower than the prior-year quarter's $12.31 billion.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.
EPS came in at $0.84. The 17 earnings estimates compiled by S&P Capital IQ predicted $0.83 per share. Non-GAAP EPS of $0.84 for Q2 were 20% lower than the prior-year quarter's $1.05 per share. GAAP EPS of $0.30 for Q2 were 48% lower than the prior-year quarter's $0.58 per share.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 61.1%, 620 basis points worse than the prior-year quarter. Operating margin was 13.5%, much worse than the prior-year quarter. Net margin was 8.2%, 640 basis points worse than the prior-year quarter. (Margins calculated in GAAP terms.)
Next quarter's average estimate for revenue is $11.28 billion. On the bottom line, the average EPS estimate is $0.90.
Next year's average estimate for revenue is $45.12 billion. The average EPS estimate is $3.49.
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 2,712 members out of 2,930 rating the stock outperform, and 218 members rating it underperform. Among 765 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 727 give Merck a green thumbs-up, and 38 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 $51.91.
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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.