In a market where value is scarce, NYSE:MRK offers a refreshing opportunity with its solid fundamentals.

Last update: May 6, 2024

Uncover the hidden value in MERCK & CO. INC. (NYSE:MRK) as our stock screening tool recommends it as an undervalued choice. NYSE:MRK maintains a robust financial position and offers an attractive pricing perspective. Let's dig deeper into the analysis.

Analyzing Valuation Metrics

ChartMill assigns a Valuation Rating to each stock, ranging from 0 to 10. This rating is calculated by analyzing different valuation elements, such as price to earnings and free cash flow, both in absolute terms and relative to the market and industry. In the case of NYSE:MRK, the assigned 7 reflects its valuation:

Based on the Price/Earnings ratio, MRK is valued cheaper than 80.51% of the companies in the same industry.
Based on the Price/Forward Earnings ratio, MRK is valued cheaply inside the industry as 86.15% of the companies are valued more expensively.
MRK is valuated rather cheaply when we compare the Price/Forward Earnings ratio to 20.41, which is the current average of the S&P500 Index.
Based on the Enterprise Value to EBITDA ratio, MRK is valued a bit cheaper than the industry average as 76.41% of the companies are valued more expensively.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of MRK indicates a rather cheap valuation: MRK is cheaper than 80.51% 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.
A more expensive valuation may be justified as MRK's earnings are expected to grow with 93.60% in the coming years.

How do we evaluate the Profitability for NYSE:MRK?

ChartMill employs its own Profitability Rating system for stock evaluation. This score, ranging from 0 to 10, is derived from an analysis of diverse profitability metrics and margins. In the case of NYSE:MRK, the assigned 7 is noteworthy for profitability:

The Return On Assets of MRK (0.34%) is better than 83.59% of its industry peers.
Looking at the Return On Equity, with a value of 0.97%, MRK belongs to the top of the industry, outperforming 84.62% of the companies in the same industry.
MRK has a better Return On Invested Capital (3.97%) than 82.05% of its industry peers.
The last Return On Invested Capital (3.97%) for MRK is well below the 3 year average (12.63%), which needs to be investigated, but indicates that MRK had better years and this may not be a problem.
Looking at the Profit Margin, with a value of 0.61%, MRK belongs to the top of the industry, outperforming 83.59% of the companies in the same industry.
MRK has a better Operating Margin (6.76%) than 80.00% of its industry peers.
Looking at the Gross Margin, with a value of 73.53%, MRK is in the better half of the industry, outperforming 79.49% of the companies in the same industry.

Health Analysis for NYSE:MRK

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:

MRK has an Altman-Z score of 4.27. This indicates that MRK is financially healthy and has little risk of bankruptcy at the moment.
With a decent Altman-Z score value of 4.27, MRK is doing good in the industry, outperforming 80.00% of the companies in the same industry.
The Debt to FCF ratio of MRK is 3.83, which is a good value as it means it would take MRK, 3.83 years of fcf income to pay off all of its debts.
Looking at the Debt to FCF ratio, with a value of 3.83, MRK belongs to the top of the industry, outperforming 89.23% of the companies in the same industry.

Growth Assessment of 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:

The Earnings Per Share is expected to grow by 52.80% on average over the next years. This is a very strong growth
The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.

Every day, new Decent Value stocks can be found on ChartMill in our Decent Value screener.

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.