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

MERCK & CO. INC. (NYSE:MRK) is a hidden gem identified by our stock screening tool, featuring undervaluation and robust fundamentals. NYSE:MRK showcases decent financial health and profitability, coupled with an attractive price. Let's dig deeper into the analysis.

Valuation Examination 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:

• The Price/Earnings ratio is 11.05, which indicates a very decent valuation of MRK.
• Based on the Price/Earnings ratio, MRK is valued cheaply inside the industry as 91.40% of the companies are valued more expensively.
• MRK's Price/Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 30.14.
• The Price/Forward Earnings ratio is 9.44, which indicates a very decent valuation of MRK.
• 89.78% 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 96.73. MRK is valued rather cheaply when compared to this.
• MRK's Enterprise Value to EBITDA ratio is rather cheap when compared to the industry. MRK is cheaper than 87.10% of the companies in the same industry.
• 89.78% of the companies in the same industry are more expensive than MRK, based on the Price/Free Cash Flow ratio.
• The low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
• The excellent profitability rating of MRK may justify a higher PE ratio.
• MRK's earnings are expected to grow with 14.51% in the coming years. This may justify a more expensive valuation.

Understanding NYSE:MRK's Profitability

ChartMill's Profitability Rating offers a unique perspective on stock analysis, providing scores from 0 to 10. These ratings consider a wide range of profitability metrics and margins, both in comparison to industry peers and on their own merits. For NYSE:MRK, the assigned 8 is a significant indicator of profitability:

• MRK's Return On Assets of 10.34% is amongst the best of the industry. MRK outperforms 94.09% of its industry peers.
• MRK has a better Return On Equity (27.30%) than 95.70% of its industry peers.
• With an excellent Return On Invested Capital value of 19.49%, MRK belongs to the best of the industry, outperforming 95.70% of the companies in the same industry.
• MRK's Profit Margin of 19.23% is amongst the best of the industry. MRK outperforms 92.47% of its industry peers.
• Looking at the Operating Margin, with a value of 34.34%, MRK belongs to the top of the industry, outperforming 95.70% of the companies in the same industry.
• MRK's Operating Margin has improved in the last couple of years.
• Looking at the Gross Margin, with a value of 76.59%, MRK belongs to the top of the industry, outperforming 82.80% of the companies in the same industry.
• MRK's Gross Margin has improved in the last couple of years.

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 3.74. This indicates that MRK is financially healthy and has little risk of bankruptcy at the moment.
• MRK's Altman-Z score of 3.74 is fine compared to the rest of the industry. MRK outperforms 75.81% of its industry peers.
• MRK has a debt to FCF ratio of 2.57. This is a good value and a sign of high solvency as MRK would need 2.57 years to pay back of all of its debts.
• MRK has a Debt to FCF ratio of 2.57. This is amongst the best in the industry. MRK outperforms 93.01% of its industry peers.

Deciphering NYSE:MRK's Growth Rating

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 5 out of 10:

• The Earnings Per Share has grown by an impressive 409.33% over the past year.
• The Earnings Per Share has been growing by 8.04% on average over the past years. This is quite good.
• Measured over the past years, MRK shows a quite strong growth in Revenue. The Revenue has been growing by 10.40% on average per year.

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.

Keep in mind

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.