MERCK & CO. INC. (MRK)
US58933Y1055 - Common Stock
We assign a fundamental rating of 7 out of 10 to MRK. MRK was compared to 194 industry peers in the Pharmaceuticals industry. While MRK has a great profitability rating, 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. Finally MRK also has an excellent dividend rating. This makes MRK very considerable for value and dividend investing!
1. Profitability
1.1 Basic Checks
MRK had positive earnings in the past year.
In the past year MRK had a positive cash flow from operations.
In the past 5 years MRK has always 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 (10.34%) than 93.75% of its industry peers.
MRK has a Return On Equity of 27.30%. This is amongst the best in the industry. MRK outperforms 94.79% of its industry peers.
MRK's Return On Invested Capital of 19.49% is amongst the best of the industry. MRK outperforms 95.83% of its industry peers.
The Average Return On Invested Capital over the past 3 years for MRK is significantly below the industry average of 42.22%.
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 has a Profit Margin of 19.23%. This is amongst the best in the industry. MRK outperforms 93.23% of its industry peers.
MRK's Profit Margin has declined in the last couple of years.
MRK has a Operating Margin of 34.34%. This is amongst the best in the industry. MRK outperforms 96.35% of its industry peers.
MRK's Operating Margin has declined in the last couple of years.
MRK's Gross Margin of 76.59% is amongst the best of the industry. MRK outperforms 83.33% of its industry peers.
MRK's Gross Margin has been stable in the last couple of years.
| 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
The number of shares outstanding for MRK has been reduced compared to 5 years ago.
Compared to 1 year ago, MRK has a worse debt to assets ratio.
2.2 Solvency
MRK has an Altman-Z score of 4.01. This indicates that MRK is financially healthy and has little risk of bankruptcy at the moment.
The Altman-Z score of MRK (4.01) is better than 77.08% 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 94.27% of its industry peers.
A Debt/Equity ratio of 0.79 indicates that MRK is somewhat dependend on debt financing.
The Debt to Equity ratio of MRK (0.79) is worse than 69.27% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.79 | ||
| Debt/FCF | 2.57 | ||
| Altman-Z | 4.01 |
ROIC/WACC2.31
WACC8.43%
2.3 Liquidity
A Current Ratio of 1.36 indicates that MRK should not have too much problems paying its short term obligations.
With a Current ratio value of 1.36, MRK is not doing good in the industry: 78.13% of the companies in the same industry are doing better.
MRK has a Quick Ratio of 1.15. 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 (1.15) than 77.60% 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.
The earnings per share for MRK have been decreasing by -19.14% on average. This is quite bad
MRK shows a small growth in Revenue. In the last year, the Revenue has grown by 6.51%.
Measured over the past years, MRK shows a small growth in Revenue. The Revenue has been growing by 7.29% on average per year.
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 53.11% on average over the next years. This is a very strong growth
The Revenue is expected to grow by 5.82% on average over the next years.
EPS Next Y422.29%
EPS Next 2Y151.61%
EPS Next 3Y92.55%
EPS Next 5Y53.11%
Revenue Next Year6.69%
Revenue Next 2Y5.73%
Revenue Next 3Y5.9%
Revenue Next 5Y5.82%
3.3 Evolution
The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
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
The Price/Earnings ratio is 16.38, which indicates a correct valuation of MRK.
Based on the Price/Earnings ratio, MRK is valued cheaper than 85.42% of the companies in the same industry.
The average S&P500 Price/Earnings ratio is at 28.65. MRK is valued slightly cheaper when compared to this.
A Price/Forward Earnings ratio of 10.26 indicates a reasonable valuation of MRK.
87.50% 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 23.56. MRK is valued rather cheaply when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 16.38 | ||
| Fwd PE | 10.26 |
4.2 Price Multiples
84.90% of the companies in the same industry are more expensive than MRK, based on the Enterprise Value to EBITDA ratio.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of MRK indicates a rather cheap valuation: MRK is cheaper than 86.46% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 16.61 | ||
| EV/EBITDA | 10.4 |
4.3 Compensation for Growth
MRK's 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.
A more expensive valuation may be justified as MRK's earnings are expected to grow with 92.55% in the coming years.
PEG (NY)0.04
PEG (5Y)N/A
EPS Next 2Y151.61%
EPS Next 3Y92.55%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 3.13%, MRK has a reasonable but not impressive dividend return.
Compared to an average industry Dividend Yield of 4.28, MRK pays a better dividend. On top of this MRK pays more dividend than 92.71% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.23, MRK pays a bit more dividend than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.13% |
5.2 History
On average, the dividend of MRK grows each year by 8.47%, which is quite nice.
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
MRK pays out 63.72% of its income as dividend. This is not a sustainable payout ratio.
The dividend of MRK is growing, but earnings are growing more, so the dividend growth is sustainable.
DP63.72%
EPS Next 2Y151.61%
EPS Next 3Y92.55%
MERCK & CO. INC.
NYSE:MRK (11/20/2024, 8:04:00 PM)
Premarket: 97.4 -0.04 (-0.04%)97.44
+0.9 (+0.93%)
Chartmill FA Rating
GICS SectorHealth Care
GICS IndustryGroupPharmaceuticals, Biotechnology & Life Sciences
GICS IndustryPharmaceuticals
Earnings (Last)
Earnings (Next)
Inst Owners
Inst Owner Change
Ins Owners
Ins Owner Change
Market Cap246.49B
Analysts
Price Target
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.13% |
Dividend Growth(5Y)
DP
Div Incr Years
Div Non Decr Years
Ex-Date
Surprises & Revisions
EPS beat(2)
Avg EPS beat(2)
Min EPS beat(2)
Max EPS beat(2)
EPS beat(4)
Avg EPS beat(4)
Min EPS beat(4)
Max EPS beat(4)
EPS beat(8)
Avg EPS beat(8)
EPS beat(12)
Avg EPS beat(12)
EPS beat(16)
Avg EPS beat(16)
Revenue beat(2)
Avg Revenue beat(2)
Min Revenue beat(2)
Max Revenue beat(2)
Revenue beat(4)
Avg Revenue beat(4)
Min Revenue beat(4)
Max Revenue beat(4)
Revenue beat(8)
Avg Revenue beat(8)
Revenue beat(12)
Avg Revenue beat(12)
Revenue beat(16)
Avg Revenue beat(16)
PT rev (1m)
PT rev (3m)
EPS NQ rev (1m)
EPS NQ rev (3m)
EPS NY rev (1m)
EPS NY rev (3m)
Revenue NQ rev (1m)
Revenue NQ rev (3m)
Revenue NY rev (1m)
Revenue NY rev (3m)
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 16.38 | ||
| Fwd PE | 10.26 | ||
| P/S | |||
| P/FCF | |||
| P/OCF | |||
| P/B | |||
| P/tB | |||
| EV/EBITDA |
EPS(TTM)
EY
EPS(NY)
Fwd EY
FCF(TTM)
FCFY
OCF(TTM)
OCFY
SpS
BVpS
TBVpS
PEG (NY)0.04
PEG (5Y)N/A
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 10.34% | ||
| ROE | 27.3% | ||
| ROCE | |||
| ROIC | |||
| ROICexc | |||
| ROICexgc | |||
| OM | 34.34% | ||
| PM (TTM) | 19.23% | ||
| GM | 76.59% | ||
| FCFM |
ROA(3y)
ROA(5y)
ROE(3y)
ROE(5y)
ROIC(3y)
ROIC(5y)
ROICexc(3y)
ROICexc(5y)
ROICexgc(3y)
ROICexgc(5y)
ROCE(3y)
ROCE(5y)
ROICexcg growth 3Y
ROICexcg growth 5Y
ROICexc growth 3Y
ROICexc growth 5Y
OM growth 3Y
OM growth 5Y
PM growth 3Y
PM growth 5Y
GM growth 3Y
GM growth 5Y
F-Score
Asset Turnover0.54
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.79 | ||
| Debt/FCF | |||
| Debt/EBITDA | |||
| Cap/Depr | |||
| Cap/Sales | |||
| Interest Coverage | |||
| Cash Conversion | |||
| Profit Quality | |||
| Current Ratio | 1.36 | ||
| Quick Ratio | 1.15 | ||
| Altman-Z |
F-Score
WACC
ROIC/WACC
Cap/Depr(3y)
Cap/Depr(5y)
Cap/Sales(3y)
Cap/Sales(5y)
Profit Quality(3y)
Profit Quality(5y)
High Growth Momentum
Growth
EPS 1Y (TTM)92.56%
EPS 3Y-36.76%
EPS 5Y
EPS Q2Q%
EPS Next Y422.29%
EPS Next 2Y
EPS Next 3Y
EPS Next 5Y
Revenue 1Y (TTM)6.51%
Revenue growth 3Y13.13%
Revenue growth 5Y
Sales Q2Q%
Revenue Next Year
Revenue Next 2Y
Revenue Next 3Y
Revenue Next 5Y
EBIT growth 1Y
EBIT growth 3Y
EBIT growth 5Y
EBIT Next Year
EBIT Next 3Y
EBIT Next 5Y
FCF growth 1Y
FCF growth 3Y
FCF growth 5Y
OCF growth 1Y
OCF growth 3Y
OCF growth 5Y