For those who appreciate value investing, NYSE:MRK is a compelling option with its solid fundamentals.

Last update: Feb 27, 2024

Consider MERCK & CO. INC. (NYSE:MRK) as a top value stock, identified by our stock screening tool. NYSE:MRK shines in terms of profitability, solvency, and liquidity, all while remaining very reasonably priced. Let's dive deeper into the analysis.

Valuation Assessment of NYSE:MRK

An integral part of ChartMill's stock analysis is the Valuation Rating, which spans from 0 to 10. This rating evaluates diverse valuation factors, including price to earnings and cash flows, while considering the stock's profitability and growth. NYSE:MRK has received a 7 out of 10:

Based on the Price/Earnings ratio, MRK is valued a bit cheaper than 79.50% of the companies in the same industry.
84.50% of the companies in the same industry are more expensive than MRK, based on the Price/Forward Earnings ratio.
MRK's Price/Forward Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 21.49.
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of MRK indicates a somewhat cheap valuation: MRK is cheaper than 78.50% of the companies listed in the same industry.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of MRK indicates a rather cheap valuation: MRK is cheaper than 80.50% of the companies listed in the same industry.
The low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
MRK has a very decent profitability rating, which may justify a higher PE ratio.
MRK's earnings are expected to grow with 89.34% in the coming years. This may justify a more expensive valuation.

Evaluating Profitability: NYSE:MRK

ChartMill assigns a Profitability Rating to every stock. This score ranges from 0 to 10 and evaluates the different profitability ratios and margins, both absolutely, but also relative to the industry peers. NYSE:MRK scores a 7 out of 10:

The Return On Assets of MRK (4.32%) is better than 88.50% of its industry peers.
MRK has a Return On Equity of 11.17%. This is amongst the best in the industry. MRK outperforms 90.00% of its industry peers.
With an excellent Return On Invested Capital value of 8.70%, MRK belongs to the best of the industry, outperforming 88.50% of the companies in the same industry.
With an excellent Profit Margin value of 7.77%, MRK belongs to the best of the industry, outperforming 87.00% of the companies in the same industry.
MRK's Operating Margin of 15.53% is amongst the best of the industry. MRK outperforms 85.50% of its industry peers.
The Gross Margin of MRK (73.09%) is better than 81.00% of its industry peers.
In the last couple of years the Gross Margin of MRK has grown nicely.

Exploring NYSE:MRK's Health

Every stock is evaluated by ChartMill, receiving a Health Rating on a scale of 0 to 10. This assessment considers different health aspects, including liquidity and solvency, both in absolute terms and relative to industry peers. NYSE:MRK has achieved a 5 out of 10:

An Altman-Z score of 4.68 indicates that MRK is not in any danger for bankruptcy at the moment.
The Altman-Z score of MRK (4.68) is better than 79.50% of its industry peers.
MRK has a debt to FCF ratio of 2.65. This is a good value and a sign of high solvency as MRK would need 2.65 years to pay back of all of its debts.
Looking at the Debt to FCF ratio, with a value of 2.65, MRK belongs to the top of the industry, outperforming 90.00% of the companies in the same industry.

Growth Examination for NYSE:MRK

ChartMill assigns a proprietary Growth Rating to each stock. The score is computed by evaluating various growth aspects, like EPS and revenue growth. We take into account the history as well as the estimated future numbers. NYSE:MRK was assigned a score of 4 for growth:

MRK is expected to show a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 50.72% yearly.
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.

Our Decent Value screener lists more Decent Value stocks and is updated daily.

Our latest full fundamental report of MRK contains the most current fundamental analsysis.

Keep in mind

This is not investing advice! The article highlights some of the observations at the time of writing, but you should always make your own analysis and invest based on your own insights.