MERCK & CO. INC. (MRK) Stock Fundamental Analysis
NYSE:MRK - New York Stock Exchange, Inc. - US58933Y1055 - Common Stock
Overall MRK gets a fundamental rating of 7 out of 10. We evaluated MRK against 195 industry peers in the Pharmaceuticals industry. MRK has an excellent profitability rating, but there are some minor concerns on its financial health. MRK may be a bit undervalued, certainly considering the very reasonable score on growth 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.
MRK had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
Looking at the Return On Assets, with a value of 10.34%, MRK belongs to the top of the industry, outperforming 94.09% of the companies in the same industry.
With an excellent Return On Equity value of 27.30%, MRK belongs to the best of the industry, outperforming 95.16% of the companies in the same industry.
MRK's Return On Invested Capital of 19.49% is amongst the best of the industry. MRK outperforms 95.70% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for MRK is significantly below the industry average of 43.99%.
The 3 year average ROIC (12.63%) for MRK is below the current ROIC(19.49%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 10.34% | ||
| ROE | 27.3% | ||
| ROIC | 19.49% |
ROA(3y)8.66%
ROA(5y)9.07%
ROE(3y)22.24%
ROE(5y)26.52%
ROIC(3y)12.63%
ROIC(5y)12.83%
1.3 Margins
MRK's Profit Margin of 19.23% is amongst the best of the industry. MRK outperforms 92.47% of its industry peers.
In the last couple of years the Profit Margin of MRK has declined.
MRK has a Operating Margin of 34.34%. This is amongst the best in the industry. MRK outperforms 95.70% of its industry peers.
In the last couple of years the Operating Margin of MRK has declined.
MRK has a Gross Margin of 76.59%. This is amongst the best in the industry. MRK outperforms 82.80% 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 | 34.34% | ||
| PM (TTM) | 19.23% | ||
| GM | 76.59% |
OM growth 3Y-36.42%
OM growth 5Y-24.03%
PM growth 3Y-67.08%
PM growth 5Y-47.14%
GM growth 3Y0.65%
GM growth 5Y1.25%
2. Health
2.1 Basic Checks
The Return on Invested Capital (ROIC) is well above the Cost of Capital (WACC), so MRK is creating value.
Compared to 1 year ago, MRK has less shares outstanding
MRK has less shares outstanding than it did 5 years ago.
The debt/assets ratio for MRK is higher compared to a year ago.
2.2 Solvency
An Altman-Z score of 4.02 indicates that MRK is not in any danger for bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 4.02, MRK is in the better half of the industry, outperforming 76.88% of the companies in the same industry.
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 better Debt to FCF ratio (2.57) than 93.55% of its industry peers.
MRK has a Debt/Equity ratio of 0.79. This is a neutral value indicating MRK is somewhat dependend on debt financing.
MRK's Debt to Equity ratio of 0.79 is on the low side compared to the rest of the industry. MRK is outperformed by 69.35% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.79 | ||
| Debt/FCF | 2.57 | ||
| Altman-Z | 4.02 |
ROIC/WACC1.89
WACC10.32%
2.3 Liquidity
MRK has a Current Ratio of 1.36. This is a normal value and indicates that MRK is financially healthy and should not expect problems in meeting its short term obligations.
Looking at the Current ratio, with a value of 1.36, MRK is doing worse than 77.96% of the companies in the same industry.
A Quick Ratio of 1.15 indicates that MRK should not have too much problems paying its short term obligations.
MRK has a worse Quick ratio (1.15) than 75.81% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.36 | ||
| Quick Ratio | 1.15 |
3. Growth
3.1 Past
MRK shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 92.56%, which is quite impressive.
Measured over the past years, MRK shows a very negative growth in Earnings Per Share. The EPS has been decreasing by -19.14% on average per year.
The Revenue has been growing slightly by 6.51% in the past year.
MRK shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 7.29% yearly.
EPS 1Y (TTM)92.56%
EPS 3Y-36.76%
EPS 5Y-19.14%
EPS Q2Q%-26.29%
Revenue 1Y (TTM)6.51%
Revenue growth 3Y13.13%
Revenue growth 5Y7.29%
Sales Q2Q%4.35%
3.2 Future
The Earnings Per Share is expected to grow by 50.50% on average over the next years. This is a very strong growth
Based on estimates for the next years, MRK will show a small growth in Revenue. The Revenue will grow by 5.14% on average per year.
EPS Next Y422.19%
EPS Next 2Y152.71%
EPS Next 3Y92.36%
EPS Next 5Y50.5%
Revenue Next Year6.67%
Revenue Next 2Y5.9%
Revenue Next 3Y5.97%
Revenue Next 5Y5.14%
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 accelerating.
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
With a Price/Earnings ratio of 16.17, MRK is valued correctly.
Based on the Price/Earnings ratio, MRK is valued cheaply inside the industry as 87.10% of the companies are valued more expensively.
Compared to an average S&P500 Price/Earnings ratio of 28.29, MRK is valued a bit cheaper.
A Price/Forward Earnings ratio of 10.05 indicates a reasonable valuation of MRK.
88.71% of the companies in the same industry are more expensive than MRK, based on the Price/Forward Earnings ratio.
When comparing the Price/Forward Earnings ratio of MRK to the average of the S&P500 Index (24.44), we can say MRK is valued rather cheaply.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 16.17 | ||
| Fwd PE | 10.05 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, MRK is valued cheaper than 84.95% of the companies in the same industry.
Based on the Price/Free Cash Flow ratio, MRK is valued cheaply inside the industry as 87.10% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 16.41 | ||
| EV/EBITDA | 10.45 |
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.
MRK's earnings are expected to grow with 92.36% in the coming years. This may justify a more expensive valuation.
PEG (NY)0.04
PEG (5Y)N/A
EPS Next 2Y152.71%
EPS Next 3Y92.36%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 3.22%, MRK has a reasonable but not impressive dividend return.
MRK's Dividend Yield is rather good when compared to the industry average which is at 4.09. MRK pays more dividend than 93.01% of the companies in the same industry.
MRK's Dividend Yield is a higher than the S&P500 average which is at 2.28.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.22% |
5.2 History
The dividend of MRK is nicely growing with an annual growth rate of 8.47%!
MRK has been paying a dividend for at least 10 years, so it has a reliable track record.
MRK has not decreased their dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)8.47%
Div Incr Years13
Div Non Decr Years33
5.3 Sustainability
63.72% of the earnings are spent on dividend by MRK. This is not a sustainable payout ratio.
MRK's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP63.72%
EPS Next 2Y152.71%
EPS Next 3Y92.36%
MERCK & CO. INC.
NYSE:MRK (1/21/2025, 6:40:00 PM)
After market: 96.2395 0 (0%)96.24
-1.68 (-1.72%)
Chartmill FA Rating
GICS SectorHealth Care
GICS IndustryGroupPharmaceuticals, Biotechnology & Life Sciences
GICS IndustryPharmaceuticals
Earnings (Last)
Earnings (Next)
Inst Owners79.13%
Inst Owner Change-0.23%
Ins Owners0.04%
Ins Owner Change0.77%
Market Cap243.45B
Analysts79.38
Price Target131.54 (36.68%)
Short Float %1.22%
Short Ratio2.68
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.22% |
Yearly Dividend2.94
Dividend Growth(5Y)8.47%
DP63.72%
Div Incr Years13
Div Non Decr Years33
Ex-DateN/A
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)4.07%
Min EPS beat(2)3.35%
Max EPS beat(2)4.78%
EPS beat(4)4
Avg EPS beat(4)36.16%
Min EPS beat(4)3.35%
Max EPS beat(4)127.21%
EPS beat(8)8
Avg EPS beat(8)21.03%
EPS beat(12)12
Avg EPS beat(12)18.06%
EPS beat(16)13
Avg EPS beat(16)12.99%
Revenue beat(2)2
Avg Revenue beat(2)0.46%
Min Revenue beat(2)0.2%
Max Revenue beat(2)0.71%
Revenue beat(4)3
Avg Revenue beat(4)0.9%
Min Revenue beat(4)-0.09%
Max Revenue beat(4)2.78%
Revenue beat(8)7
Avg Revenue beat(8)1.76%
Revenue beat(12)11
Avg Revenue beat(12)2.68%
Revenue beat(16)13
Avg Revenue beat(16)0.5%
PT rev (1m)-1.28%
PT rev (3m)-7.85%
EPS NQ rev (1m)0%
EPS NQ rev (3m)-12.15%
EPS NY rev (1m)0%
EPS NY rev (3m)-3.83%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)-2.73%
Revenue NY rev (1m)0.01%
Revenue NY rev (3m)-0.2%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 16.17 | ||
| Fwd PE | 10.05 | ||
| P/S | 3.85 | ||
| P/FCF | 16.41 | ||
| P/OCF | 13.33 | ||
| P/B | 5.47 | ||
| P/tB | 42.01 | ||
| EV/EBITDA | 10.45 |
EPS(TTM)5.95
EY6.18%
EPS(NY)9.58
Fwd EY9.95%
FCF(TTM)5.87
FCFY6.1%
OCF(TTM)7.22
OCFY7.5%
SpS24.97
BVpS17.59
TBVpS2.29
PEG (NY)0.04
PEG (5Y)N/A
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 10.34% | ||
| ROE | 27.3% | ||
| ROCE | 24.67% | ||
| ROIC | 19.49% | ||
| ROICexc | 23.37% | ||
| ROICexgc | 49.47% | ||
| OM | 34.34% | ||
| PM (TTM) | 19.23% | ||
| GM | 76.59% | ||
| FCFM | 23.49% |
ROA(3y)8.66%
ROA(5y)9.07%
ROE(3y)22.24%
ROE(5y)26.52%
ROIC(3y)12.63%
ROIC(5y)12.83%
ROICexc(3y)14.47%
ROICexc(5y)14.83%
ROICexgc(3y)34.65%
ROICexgc(5y)37.67%
ROCE(3y)15.99%
ROCE(5y)16.24%
ROICexcg growth 3Y-38.8%
ROICexcg growth 5Y-25.67%
ROICexc growth 3Y-34.34%
ROICexc growth 5Y-24.16%
OM growth 3Y-36.42%
OM growth 5Y-24.03%
PM growth 3Y-67.08%
PM growth 5Y-47.14%
GM growth 3Y0.65%
GM growth 5Y1.25%
F-Score7
Asset Turnover0.54
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.79 | ||
| Debt/FCF | 2.57 | ||
| Debt/EBITDA | 1.35 | ||
| Cap/Depr | 80.26% | ||
| Cap/Sales | 5.42% | ||
| Interest Coverage | 17.44 | ||
| Cash Conversion | 70.35% | ||
| Profit Quality | 122.16% | ||
| Current Ratio | 1.36 | ||
| Quick Ratio | 1.15 | ||
| Altman-Z | 4.02 |
F-Score7
WACC10.32%
ROIC/WACC1.89
Cap/Depr(3y)116.81%
Cap/Depr(5y)114.51%
Cap/Sales(3y)7.65%
Cap/Sales(5y)8.5%
Profit Quality(3y)893.42%
Profit Quality(5y)572.79%
High Growth Momentum
Growth
EPS 1Y (TTM)92.56%
EPS 3Y-36.76%
EPS 5Y-19.14%
EPS Q2Q%-26.29%
EPS Next Y422.19%
EPS Next 2Y152.71%
EPS Next 3Y92.36%
EPS Next 5Y50.5%
Revenue 1Y (TTM)6.51%
Revenue growth 3Y13.13%
Revenue growth 5Y7.29%
Sales Q2Q%4.35%
Revenue Next Year6.67%
Revenue Next 2Y5.9%
Revenue Next 3Y5.97%
Revenue Next 5Y5.14%
EBIT growth 1Y4.37%
EBIT growth 3Y-28.07%
EBIT growth 5Y-18.5%
EBIT Next Year337.7%
EBIT Next 3Y77.42%
EBIT Next 5Y44.81%
FCF growth 1Y-2.68%
FCF growth 3Y16.22%
FCF growth 5Y1.94%
OCF growth 1Y-7.27%
OCF growth 3Y8.25%
OCF growth 5Y3.55%