The Zacks – Large Cap Pharmaceuticals Industry has been hot as of late, increasing more than 10% in value over the last month vs. the S&P 500’s 6.3% return. In fact, the industry is beating the general market on a multitude of timeframes, as illustrated in the chart below.

Image Source: Zacks Investment Research

One company residing in the sector slated to release quarterly results before the opening bell on July 28^th is the widely-known Merck & Co. (MRK Quick QuoteMRK - Free Report) .

Merck is a global healthcare company that delivers innovative health solutions through prescription medicines, vaccines, biologic therapies, and animal health products.

In addition, the company is a Zacks Rank #2 (Buy) with an overall VGM Score of an A. Let’s take a look at how the company shapes up heading into its quarterly release.

Share Performance & Valuation

Year-to-date, Merck shares are well in the green, increasing nearly 20% in value and easily outperforming its Zacks Industry.

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Shares have upheld their strength, increasing nearly 6% in value over the last three months.

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The substantial share performance is undoubtedly inspiring, especially in a market where most stocks reside in the red year-to-date. Buyers have defended the stock all year long.

In addition, Merck sports enticing valuation metrics. Its 12.3X forward earnings multiple is well below its five-year median of 14.4X and represents an enticing 31% discount relative to the S&P 500.

MRK sports a Style Score of a B for Value.

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Quarterly Estimates

Analysts have been quiet over the last 60 days, with the Consensus Estimate Trend remaining unchanged and zero estimate revisions for the quarter to be reported. The $1.68 Zacks Consensus EPS Estimate reflects a sizable 30% increase in quarterly earnings year-over-year.

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The top-line is also in exceptional shape; the $13.9 billion quarterly revenue estimate pencils in a substantial 22% uptick from year-ago sales of $11.4 billion. The chart below illustrates Merck’s revenue on a quarterly basis.

Image Source: Zacks Investment Research

Quarterly Performance & Market Reactions

Merck has been on a hot earnings streak as of late, exceeding both top and bottom-line estimates in its previous three quarters. In addition, in its latest quarter, Merck recorded a 6% top-line beat and a sizable 18% bottom-line beat.

The market has reacted poorly to EPS misses but positively towards beats – Over its last three EPS beats, shares have moved upwards twice. Over its last three bottom-line misses, shares have moved downwards each time.

Dividends

The company’s dividend metrics are worth a highlight as well. Merck’s annual dividend yield sits on the high side at 3.1%, much higher than that of the S&P 500.

In addition, the company has increased its dividend an impressive six times over the last five years, with a five-year annualized dividend growth rate of a sizable 9.4%.

Image Source: Zacks Investment Research

Bottom Line

Merck shares have been hot year-to-date, top and bottom-line estimates for the quarter to be reported display serious growth, and the company sports solid valuation metrics.

In addition, the company sports a Zacks Rank #2 (Buy), has reported quarterly results above expectations as of late, and has strong dividend metrics.

Heading into the quarterly report, MRK has an Earnings ESP Score of -0.7%.