When you look at NYSE:MRK, it's hard to ignore the strong fundamentals, especially considering its likely undervaluation.

Last update: May 28, 2024

MERCK & CO. INC. (NYSE:MRK) has caught the attention of our stock screener as a great value stock. NYSE:MRK excels in profitability, solvency, and liquidity, all while being very reasonably priced. Let's delve into the details.

Deciphering NYSE:MRK's Valuation Rating

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:

MRK's Price/Earnings ratio is a bit cheaper when compared to the industry. MRK is cheaper than 78.87% of the companies in the same industry.
84.54% of the companies in the same industry are more expensive than MRK, based on the Price/Forward Earnings ratio.
The average S&P500 Price/Forward Earnings ratio is at 20.18. MRK is valued slightly cheaper when compared to this.
76.29% of the companies in the same industry are more expensive than MRK, based on the Enterprise Value to EBITDA ratio.
80.93% of the companies in the same industry are more expensive than MRK, based on the Price/Free Cash Flow ratio.
MRK's low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
The decent profitability rating of MRK may justify a higher PE ratio.
A more expensive valuation may be justified as MRK's earnings are expected to grow with 94.83% in the coming years.

Evaluating Profitability: NYSE:MRK

ChartMill utilizes a Profitability Rating to assess stocks, scoring them on a scale of 0 to 10. This rating takes into account a variety of profitability ratios and margins, both in absolute terms and in comparison to industry peers. NYSE:MRK has earned a 7 out of 10:

The Return On Assets of MRK (2.18%) is better than 85.05% of its industry peers.
Looking at the Return On Equity, with a value of 5.71%, MRK belongs to the top of the industry, outperforming 85.57% of the companies in the same industry.
MRK has a Return On Invested Capital of 5.98%. This is amongst the best in the industry. MRK outperforms 86.60% of its industry peers.
The 3 year average ROIC (12.63%) for MRK is well above the current ROIC(5.98%). The reason for the recent decline needs to be investigated.
With an excellent Profit Margin value of 3.76%, MRK belongs to the best of the industry, outperforming 85.57% of the companies in the same industry.
MRK has a better Operating Margin (9.95%) than 83.51% of its industry peers.
MRK has a better Gross Margin (74.85%) than 79.90% of its industry peers.

Health Examination for NYSE:MRK

ChartMill assigns a proprietary Health Rating to each stock. The score is computed by evaluating various liquidity and solvency ratios and ranges from 0 to 10. NYSE:MRK was assigned a score of 5 for health:

An Altman-Z score of 4.60 indicates that MRK is not in any danger for bankruptcy at the moment.
MRK has a Altman-Z score of 4.60. This is amongst the best in the industry. MRK outperforms 81.96% of its industry peers.
The Debt to FCF ratio of MRK is 3.10, which is a good value as it means it would take MRK, 3.10 years of fcf income to pay off all of its debts.
MRK has a better Debt to FCF ratio (3.10) than 89.69% of its industry peers.

Assessing Growth for NYSE:MRK

ChartMill assigns a Growth Rating to every stock. This score ranges from 0 to 10 and evaluates the different growth aspects like EPS and Revenue, both in the past as in the future. NYSE:MRK scores a 4 out of 10:

The Earnings Per Share is expected to grow by 52.80% on average over the next years. This is a very strong growth
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.

Check the latest full fundamental report of MRK for a complete fundamental analysis.

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.