NYSE:MRK stands out as a stock that provides good value for the fundamentals it showcases.

Last update: Oct 9, 2024

Our stock screener has spotted MERCK & CO. INC. (NYSE:MRK) as an undervalued stock with solid fundamentals. NYSE:MRK shows decent health and profitability. At the same time it remains remains attractively priced. We'll dive into each aspect below.

Evaluating Valuation: 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 9 out of 10:

MRK's Price/Earnings ratio is rather cheap when compared to the industry. MRK is cheaper than 87.56% of the companies in the same industry.
The average S&P500 Price/Earnings ratio is at 30.97. MRK is valued slightly cheaper when compared to this.
Based on the Price/Forward Earnings ratio of 11.05, the valuation of MRK can be described as reasonable.
Based on the Price/Forward Earnings ratio, MRK is valued cheaper than 86.53% of the companies in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 22.29. MRK is valued rather cheaply when compared to this.
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of MRK indicates a rather cheap valuation: MRK is cheaper than 81.35% of the companies listed in the same industry.
Based on the Price/Free Cash Flow ratio, MRK is valued cheaply inside the industry as 83.94% of the companies are valued more expensively.
The 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 93.31% in the coming years.

Profitability Assessment of 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:

Looking at the Return On Assets, with a value of 12.20%, MRK belongs to the top of the industry, outperforming 94.82% of the companies in the same industry.
Looking at the Return On Equity, with a value of 31.52%, MRK belongs to the top of the industry, outperforming 94.82% of the companies in the same industry.
MRK has a better Return On Invested Capital (16.35%) than 93.26% of its industry peers.
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 Profit Margin of 21.98%. This is amongst the best in the industry. MRK outperforms 93.26% of its industry peers.
MRK has a better Operating Margin (28.68%) than 93.78% of its industry peers.
With an excellent Gross Margin value of 75.79%, MRK belongs to the best of the industry, outperforming 83.42% of the companies in the same industry.

Assessing Health for NYSE:MRK

ChartMill employs a unique Health Rating system for all stocks. This rating, ranging from 0 to 10, is determined by analyzing various liquidity and solvency ratios. For NYSE:MRK, the assigned 6 for health provides valuable insights:

An Altman-Z score of 4.35 indicates that MRK is not in any danger for bankruptcy at the moment.
With a decent Altman-Z score value of 4.35, MRK is doing good in the industry, outperforming 77.20% of the companies in the same industry.
The Debt to FCF ratio of MRK is 2.87, which is a good value as it means it would take MRK, 2.87 years of fcf income to pay off all of its debts.
With an excellent Debt to FCF ratio value of 2.87, MRK belongs to the best of the industry, outperforming 91.71% of the companies in the same industry.

Growth Assessment of NYSE:MRK

A key component of ChartMill's stock assessment is the Growth Rating, which spans from 0 to 10. This rating evaluates diverse growth factors, such as EPS and revenue growth, considering both past performance and future projections. NYSE:MRK has received a 5 out of 10:

The Earnings Per Share has grown by an impressive 131.67% over the past year.
MRK is expected to show a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 53.11% yearly.
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.

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.