NYSE:MRK is probably undervalued for the fundamentals it is displaying.

Last update: Aug 28, 2024

Take a closer look at MERCK & CO. INC. (NYSE:MRK), a remarkable value stock uncovered by our stock screener. NYSE:MRK excels in fundamentals and maintains a very reasonable valuation. Let's break it down further.

A Closer Look at Valuation for NYSE:MRK

To assess a stock's valuation, ChartMill utilizes a Valuation Rating on a scale of 0 to 10. This comprehensive assessment considers various valuation aspects, comparing price to earnings and cash flows, while factoring in profitability and growth. NYSE:MRK has achieved a 8 out of 10:

MRK's Price/Earnings ratio is rather cheap when compared to the industry. MRK is cheaper than 87.50% of the companies in the same industry.
MRK's Price/Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 30.01.
The Price/Forward Earnings ratio is 11.80, which indicates a very decent valuation of MRK.
Compared to the rest of the industry, the Price/Forward Earnings ratio of MRK indicates a rather cheap valuation: MRK is cheaper than 85.94% of the companies listed in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 21.67. MRK is valued slightly cheaper when compared to this.
MRK's Enterprise Value to EBITDA ratio is rather cheap when compared to the industry. MRK is cheaper than 81.77% of the companies 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 84.38% of the companies listed in the same industry.
MRK's low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
MRK has an outstanding 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 93.65% in the coming years.

Assessing Profitability for NYSE:MRK

ChartMill assigns a proprietary Profitability Rating to each stock. The score is computed by evaluating various profitability ratios and margins and ranges from 0 to 10. NYSE:MRK was assigned a score of 8 for profitability:

The Return On Assets of MRK (12.20%) is better than 95.31% of its industry peers.
Looking at the Return On Equity, with a value of 31.52%, MRK belongs to the top of the industry, outperforming 94.79% of the companies in the same industry.
With an excellent Return On Invested Capital value of 16.35%, MRK belongs to the best of the industry, outperforming 93.23% of the companies in the same industry.
The last Return On Invested Capital (16.35%) for MRK is above the 3 year average (12.63%), which is a sign of increasing profitability.
MRK has a better Profit Margin (21.98%) than 93.75% of its industry peers.
MRK has a better Operating Margin (28.68%) than 93.75% of its industry peers.
With an excellent Gross Margin value of 75.79%, MRK belongs to the best of the industry, outperforming 82.29% of the companies in the same industry.

A Closer Look at Health 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 6 for health:

MRK has an Altman-Z score of 4.52. This indicates that MRK is financially healthy and has little risk of bankruptcy at the moment.
MRK's Altman-Z score of 4.52 is fine compared to the rest of the industry. MRK outperforms 79.69% of its industry peers.
MRK has a debt to FCF ratio of 2.87. This is a good value and a sign of high solvency as MRK would need 2.87 years to pay back of all of its debts.
With an excellent Debt to FCF ratio value of 2.87, MRK belongs to the best of the industry, outperforming 91.67% of the companies in the same industry.

Deciphering NYSE:MRK's Growth Rating

ChartMill employs its own Growth Rating system for all stocks. This score, ranging from 0 to 10, is derived by evaluating different growth factors, such as EPS and revenue growth, taking into account both past performance and future projections. NYSE:MRK has earned a 5 for growth:

The Earnings Per Share has grown by an impressive 131.67% over the past year.
The Earnings Per Share is expected to grow by 53.11% 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.

More Decent Value stocks can be found in our Decent Value screener.

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

Disclaimer

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.