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

Last update: Oct 30, 2024

Our stock screening tool has identified MERCK & CO. INC. (NYSE:MRK) as an undervalued gem with strong fundamentals. NYSE:MRK boasts decent financial health and profitability while maintaining an attractive price point. We'll break it down further.

Valuation Analysis for NYSE:MRK

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 9 reflects its valuation:

Based on the Price/Earnings ratio, MRK is valued cheaper than 87.05% of the companies in the same industry.
Compared to an average S&P500 Price/Earnings ratio of 30.84, MRK is valued a bit cheaper.
With a Price/Forward Earnings ratio of 10.56, the valuation of MRK can be described as very reasonable.
Based on the Price/Forward Earnings ratio, MRK is valued cheaply inside the industry as 88.08% of the companies are valued more expensively.
The average S&P500 Price/Forward Earnings ratio is at 22.57. MRK is valued rather cheaply when compared to this.
Based on the Enterprise Value to EBITDA ratio, MRK is valued cheaply inside the industry as 81.87% 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 84.97% 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 an outstanding profitability rating, which may justify a higher PE ratio.
MRK's earnings are expected to grow with 93.31% in the coming years. This may justify a more expensive valuation.

Analyzing Profitability Metrics

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 8 is noteworthy for profitability:

The Return On Assets of MRK (12.20%) is better than 95.85% of its industry peers.
MRK's Return On Equity of 31.52% is amongst the best of the industry. MRK outperforms 95.34% of its industry peers.
MRK's Return On Invested Capital of 16.35% is amongst the best of the industry. MRK outperforms 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.
Looking at the Profit Margin, with a value of 21.98%, MRK belongs to the top of the industry, outperforming 94.30% of the companies in the same industry.
MRK's Operating Margin of 28.68% is amongst the best of the industry. MRK outperforms 94.30% of its industry peers.
Looking at the Gross Margin, with a value of 75.79%, MRK belongs to the top of the industry, outperforming 83.42% of the companies in the same industry.

Assessing Health Metrics 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:

An Altman-Z score of 4.24 indicates that MRK is not in any danger for bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 4.24, MRK is in the better half of 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.
The Debt to FCF ratio of MRK (2.87) is better than 91.71% of its industry peers.

How We Gauge Growth 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 5 for growth:

MRK shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 131.67%, which is quite impressive.
Based on estimates for the next years, MRK will show a very strong growth in Earnings Per Share. The EPS will grow by 53.11% on average per year.
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.

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

For an up to date full fundamental analysis you can check the fundamental report of MRK

Disclaimer

This article should in no way be interpreted as advice. The article is based on the observed metrics at the time of writing, but you should always make your own analysis and trade or invest at your own responsibility.