MERCK & CO. INC. (MRK) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:MRK - US58933Y1055 - Common Stock
104.83 USD
+0.2 (+0.19%)
104.74 USD
-0.09 (-0.09%)
MRK gets a fundamental rating of 7 out of 10. The analysis compared the fundamentals against 192 industry peers in the Pharmaceuticals industry. While MRK belongs to the best of the industry regarding profitability, there are some minor concerns on its financial health. A decent growth rate in combination with a cheap valuation! Better keep an eye on MRK. MRK also has an excellent dividend rating. These ratings would make MRK suitable for value and dividend investing!
1. Profitability
1.1 Basic Checks
MRK had positive earnings in the past year.
MRK had a positive operating cash flow in the past year.
Each year in the past 5 years MRK has been profitable.
In the past 5 years MRK always reported a positive cash flow from operatings.
1.2 Ratios
MRK has a better Return On Assets (14.69%) than 95.31% of its industry peers.
MRK has a Return On Equity of 36.71%. This is amongst the best in the industry. MRK outperforms 96.35% of its industry peers.
With an excellent Return On Invested Capital value of 19.15%, MRK belongs to the best of the industry, outperforming 96.35% of the companies in the same industry.
MRK had an Average Return On Invested Capital over the past 3 years of 20.39%. This is significantly above the industry average of 12.71%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 14.69% | ||
| ROE | 36.71% | ||
| ROIC | 19.15% |
ROA(3y)9.42%
ROA(5y)9.66%
ROE(3y)23.17%
ROE(5y)26.32%
ROIC(3y)20.39%
ROIC(5y)17.93%
1.3 Margins
MRK has a Profit Margin of 29.63%. This is amongst the best in the industry. MRK outperforms 94.79% of its industry peers.
In the last couple of years the Profit Margin of MRK has remained more or less at the same level.
With an excellent Operating Margin value of 38.08%, MRK belongs to the best of the industry, outperforming 96.35% of the companies in the same industry.
In the last couple of years the Operating Margin of MRK has grown nicely.
MRK has a better Gross Margin (78.72%) than 82.81% of its industry peers.
In the last couple of years the Gross Margin of MRK has remained more or less at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 38.08% | ||
| PM (TTM) | 29.63% | ||
| GM | 78.72% |
OM growth 3Y5.75%
OM growth 5Y7.99%
PM growth 3Y-0.15%
PM growth 5Y1.18%
GM growth 3Y1.92%
GM growth 5Y1.45%
2. Health
2.1 Basic Checks
MRK has a Return on Invested Capital (ROIC), which is well above the Cost of Capital (WACC), which means it is creating value.
MRK has about the same amout of shares outstanding than it did 1 year ago.
The number of shares outstanding for MRK has been reduced compared to 5 years ago.
Compared to 1 year ago, MRK has an improved debt to assets ratio.
2.2 Solvency
MRK has an Altman-Z score of 4.08. This indicates that MRK is financially healthy and has little risk of bankruptcy at the moment.
The Altman-Z score of MRK (4.08) is better than 72.40% of its industry peers.
The Debt to FCF ratio of MRK is 3.17, which is a good value as it means it would take MRK, 3.17 years of fcf income to pay off all of its debts.
Looking at the Debt to FCF ratio, with a value of 3.17, MRK belongs to the top of the industry, outperforming 88.02% of the companies in the same industry.
MRK has a Debt/Equity ratio of 0.77. This is a neutral value indicating MRK is somewhat dependend on debt financing.
MRK's Debt to Equity ratio of 0.77 is on the low side compared to the rest of the industry. MRK is outperformed by 68.75% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.77 | ||
| Debt/FCF | 3.17 | ||
| Altman-Z | 4.08 |
ROIC/WACC2.22
WACC8.62%
2.3 Liquidity
A Current Ratio of 1.66 indicates that MRK should not have too much problems paying its short term obligations.
MRK has a worse Current ratio (1.66) than 66.67% of its industry peers.
MRK has a Quick Ratio of 1.44. This is a normal value and indicates that MRK is financially healthy and should not expect problems in meeting its short term obligations.
MRK has a worse Quick ratio (1.44) than 64.58% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.66 | ||
| Quick Ratio | 1.44 |
3. Growth
3.1 Past
MRK shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 48.07%, which is quite impressive.
The Earnings Per Share has been growing by 8.04% on average over the past years. This is quite good.
The Revenue has been growing slightly by 1.68% in the past year.
The Revenue has been growing by 10.40% on average over the past years. This is quite good.
EPS 1Y (TTM)48.07%
EPS 3Y6.87%
EPS 5Y8.04%
EPS Q2Q%70.7%
Revenue 1Y (TTM)1.68%
Revenue growth 3Y9.63%
Revenue growth 5Y10.4%
Sales Q2Q%3.72%
3.2 Future
MRK is expected to show a small growth in Earnings Per Share. In the coming years, the EPS will grow by 5.92% yearly.
MRK is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 2.39% yearly.
EPS Next Y18.21%
EPS Next 2Y11.65%
EPS Next 3Y11.32%
EPS Next 5Y5.92%
Revenue Next Year1.08%
Revenue Next 2Y3.07%
Revenue Next 3Y3.96%
Revenue Next 5Y2.39%
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
The Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
A Price/Earnings ratio of 11.90 indicates a reasonable valuation of MRK.
Based on the Price/Earnings ratio, MRK is valued cheaper than 88.54% of the companies in the same industry.
When comparing the Price/Earnings ratio of MRK to the average of the S&P500 Index (26.31), we can say MRK is valued rather cheaply.
With a Price/Forward Earnings ratio of 11.01, the valuation of MRK can be described as very reasonable.
MRK's Price/Forward Earnings ratio is rather cheap when compared to the industry. MRK is cheaper than 85.94% of the companies in the same industry.
Compared to an average S&P500 Price/Forward Earnings ratio of 36.59, MRK is valued rather cheaply.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 11.9 | ||
| Fwd PE | 11.01 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, MRK is valued cheaply inside the industry as 89.06% of the companies are valued more expensively.
83.85% of the companies in the same industry are more expensive than MRK, based on the Price/Free Cash Flow ratio.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 19.94 | ||
| EV/EBITDA | 9.76 |
4.3 Compensation for Growth
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.
PEG (NY)0.65
PEG (5Y)1.48
EPS Next 2Y11.65%
EPS Next 3Y11.32%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 3.25%, MRK has a reasonable but not impressive dividend return.
Compared to an average industry Dividend Yield of 6.85, MRK pays a better dividend. On top of this MRK pays more dividend than 94.79% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.34, MRK pays a bit more dividend than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.25% |
5.2 History
The dividend of MRK is nicely growing with an annual growth rate of 6.90%!
MRK has been paying a dividend for at least 10 years, so it has a reliable track record.
MRK has not decreased its dividend for at least 10 years, so it has a reliable track record of non decreasing dividend.
Dividend Growth(5Y)6.9%
Div Incr Years14
Div Non Decr Years34
5.3 Sustainability
42.60% of the earnings are spent on dividend by MRK. This is a bit on the high side, but may be sustainable.
MRK's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP42.6%
EPS Next 2Y11.65%
EPS Next 3Y11.32%
104.83
+0.2 (+0.19%)
Chartmill FA Rating
GICS SectorHealth Care
GICS IndustryGroupPharmaceuticals, Biotechnology & Life Sciences
GICS IndustryPharmaceuticals
Earnings (Last)
Earnings (Next)
Inst Owners80.53%
Inst Owner Change-0.94%
Ins Owners0.05%
Ins Owner Change-0.55%
Market Cap260.19B
Revenue(TTM)64.23B
Net Income(TTM)19.03B
Analysts75.76
Price Target102.32 (-2.39%)
Short Float %1.03%
Short Ratio2.1
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.25% |
Yearly Dividend3.1
Dividend Growth(5Y)6.9%
DP42.6%
Div Incr Years14
Div Non Decr Years34
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)10.37%
Min EPS beat(2)7.69%
Max EPS beat(2)13.06%
EPS beat(4)4
Avg EPS beat(4)7.28%
Min EPS beat(4)2.93%
Max EPS beat(4)13.06%
EPS beat(8)8
Avg EPS beat(8)21.72%
EPS beat(12)12
Avg EPS beat(12)16.45%
EPS beat(16)16
Avg EPS beat(16)15.36%
Revenue beat(2)1
Avg Revenue beat(2)-0.35%
Min Revenue beat(2)-1.54%
Max Revenue beat(2)0.83%
Revenue beat(4)2
Avg Revenue beat(4)-0.09%
Min Revenue beat(4)-1.54%
Max Revenue beat(4)0.83%
Revenue beat(8)5
Avg Revenue beat(8)0.41%
Revenue beat(12)9
Avg Revenue beat(12)1.14%
Revenue beat(16)13
Avg Revenue beat(16)1.98%
PT rev (1m)0.81%
PT rev (3m)0.86%
EPS NQ rev (1m)-6.16%
EPS NQ rev (3m)-6.79%
EPS NY rev (1m)0.38%
EPS NY rev (3m)0.29%
Revenue NQ rev (1m)-0.76%
Revenue NQ rev (3m)-0.8%
Revenue NY rev (1m)0.06%
Revenue NY rev (3m)-0.09%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 11.9 | ||
| Fwd PE | 11.01 | ||
| P/S | 4.05 | ||
| P/FCF | 19.94 | ||
| P/OCF | 15.25 | ||
| P/B | 5.02 | ||
| P/tB | 17.4 | ||
| EV/EBITDA | 9.76 |
EPS(TTM)8.81
EY8.4%
EPS(NY)9.52
Fwd EY9.08%
FCF(TTM)5.26
FCFY5.02%
OCF(TTM)6.88
OCFY6.56%
SpS25.88
BVpS20.89
TBVpS6.02
PEG (NY)0.65
PEG (5Y)1.48
Graham Number64.35
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 14.69% | ||
| ROE | 36.71% | ||
| ROCE | 24.24% | ||
| ROIC | 19.15% | ||
| ROICexc | 23.36% | ||
| ROICexgc | 42.18% | ||
| OM | 38.08% | ||
| PM (TTM) | 29.63% | ||
| GM | 78.72% | ||
| FCFM | 20.31% |
ROA(3y)9.42%
ROA(5y)9.66%
ROE(3y)23.17%
ROE(5y)26.32%
ROIC(3y)20.39%
ROIC(5y)17.93%
ROICexc(3y)23.53%
ROICexc(5y)20.53%
ROICexgc(3y)51.05%
ROICexgc(5y)47.06%
ROCE(3y)25.81%
ROCE(5y)22.7%
ROICexgc growth 3Y7.57%
ROICexgc growth 5Y3.37%
ROICexc growth 3Y15.27%
ROICexc growth 5Y10.69%
OM growth 3Y5.75%
OM growth 5Y7.99%
PM growth 3Y-0.15%
PM growth 5Y1.18%
GM growth 3Y1.92%
GM growth 5Y1.45%
F-Score6
Asset Turnover0.5
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.77 | ||
| Debt/FCF | 3.17 | ||
| Debt/EBITDA | 1.38 | ||
| Cap/Depr | 87.9% | ||
| Cap/Sales | 6.25% | ||
| Interest Coverage | 18.43 | ||
| Cash Conversion | 58.79% | ||
| Profit Quality | 68.56% | ||
| Current Ratio | 1.66 | ||
| Quick Ratio | 1.44 | ||
| Altman-Z | 4.08 |
F-Score6
WACC8.62%
ROIC/WACC2.22
Cap/Depr(3y)95.66%
Cap/Depr(5y)110.48%
Cap/Sales(3y)6.36%
Cap/Sales(5y)7.78%
Profit Quality(3y)903.98%
Profit Quality(5y)573.68%
High Growth Momentum
Growth
EPS 1Y (TTM)48.07%
EPS 3Y6.87%
EPS 5Y8.04%
EPS Q2Q%70.7%
EPS Next Y18.21%
EPS Next 2Y11.65%
EPS Next 3Y11.32%
EPS Next 5Y5.92%
Revenue 1Y (TTM)1.68%
Revenue growth 3Y9.63%
Revenue growth 5Y10.4%
Sales Q2Q%3.72%
Revenue Next Year1.08%
Revenue Next 2Y3.07%
Revenue Next 3Y3.96%
Revenue Next 5Y2.39%
EBIT growth 1Y2.78%
EBIT growth 3Y15.93%
EBIT growth 5Y19.23%
EBIT Next Year29.99%
EBIT Next 3Y15.06%
EBIT Next 5Y8.95%
FCF growth 1Y-0.9%
FCF growth 3Y23.27%
FCF growth 5Y12.67%
OCF growth 1Y-0.73%
OCF growth 3Y15.02%
OCF growth 5Y9.82%
MERCK & CO. INC. / MRK FAQ
What is the fundamental rating for MRK stock?
ChartMill assigns a fundamental rating of 7 / 10 to MRK.
What is the valuation status of MERCK & CO. INC. (MRK) stock?
ChartMill assigns a valuation rating of 9 / 10 to MERCK & CO. INC. (MRK). This can be considered as Undervalued.
Can you provide the profitability details for MERCK & CO. INC.?
MERCK & CO. INC. (MRK) has a profitability rating of 9 / 10.
Can you provide the expected EPS growth for MRK stock?
The Earnings per Share (EPS) of MERCK & CO. INC. (MRK) is expected to grow by 18.21% in the next year.
How sustainable is the dividend of MERCK & CO. INC. (MRK) stock?
The dividend rating of MERCK & CO. INC. (MRK) is 7 / 10 and the dividend payout ratio is 42.6%.