MERCK & CO. INC. (MRK) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:MRK - US58933Y1055 - Common Stock
99.01 USD
+1.39 (+1.42%)
99.24 USD
+0.23 (+0.23%)
Overall MRK gets a fundamental rating of 7 out of 10. We evaluated MRK against 191 industry peers in the Pharmaceuticals industry. MRK scores excellent on profitability, but there are some minor concerns on its financial health. MRK may be a bit undervalued, certainly considering the very reasonable score on growth Finally MRK also has an excellent dividend rating. These ratings could make MRK a good candidate for value and dividend investing.
1. Profitability
1.1 Basic Checks
In the past year MRK was profitable.
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
With an excellent Return On Assets value of 14.69%, MRK belongs to the best of the industry, outperforming 94.76% of the companies in the same industry.
MRK has a Return On Equity of 36.71%. This is amongst the best in the industry. MRK outperforms 95.81% of its industry peers.
MRK has a Return On Invested Capital of 19.15%. This is amongst the best in the industry. MRK outperforms 96.34% of its industry peers.
The Average Return On Invested Capital over the past 3 years for MRK is significantly above the industry average of 12.85%.
| 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 better Profit Margin (29.63%) than 94.24% of its industry peers.
In the last couple of years the Profit Margin of MRK has remained more or less at the same level.
MRK's Operating Margin of 38.08% is amongst the best of the industry. MRK outperforms 96.34% of its industry peers.
In the last couple of years the Operating Margin of MRK has grown nicely.
The Gross Margin of MRK (78.72%) is better than 83.77% 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
The Return on Invested Capital (ROIC) is well above the Cost of Capital (WACC), so MRK is creating value.
MRK has about the same amout of shares outstanding than it did 1 year ago.
Compared to 5 years ago, MRK has less shares outstanding
Compared to 1 year ago, MRK has an improved debt to assets ratio.
2.2 Solvency
MRK has an Altman-Z score of 3.95. This indicates that MRK is financially healthy and has little risk of bankruptcy at the moment.
MRK has a better Altman-Z score (3.95) than 71.73% of its industry peers.
MRK has a debt to FCF ratio of 3.17. This is a good value and a sign of high solvency as MRK would need 3.17 years to pay back of all of its debts.
MRK has a better Debt to FCF ratio (3.17) than 87.96% of its industry peers.
A Debt/Equity ratio of 0.77 indicates that 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 70.16% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.77 | ||
| Debt/FCF | 3.17 | ||
| Altman-Z | 3.95 |
ROIC/WACC2.16
WACC8.88%
2.3 Liquidity
MRK has a Current Ratio of 1.66. 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 Current ratio of 1.66. This is in the lower half of the industry: MRK underperforms 65.97% of its industry peers.
A Quick Ratio of 1.44 indicates that MRK should not have too much problems paying its short term obligations.
With a Quick ratio value of 1.44, MRK is not doing good in the industry: 62.83% of the companies in the same industry are doing better.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.66 | ||
| Quick Ratio | 1.44 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an impressive 48.07% over the past year.
Measured over the past years, MRK shows a quite strong growth in Earnings Per Share. The EPS has been growing by 8.04% on average per year.
Looking at the last year, MRK shows a small growth in Revenue. The Revenue has grown by 1.68% in the last year.
MRK shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 10.40% yearly.
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
Based on estimates for the next years, MRK will show a small growth in Earnings Per Share. The EPS will grow by 5.92% on average per year.
MRK is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 2.39% yearly.
EPS Next Y18.58%
EPS Next 2Y11.48%
EPS Next 3Y11.36%
EPS Next 5Y5.92%
Revenue Next Year1.22%
Revenue Next 2Y3.07%
Revenue Next 3Y3.9%
Revenue Next 5Y2.39%
3.3 Evolution
The EPS growth rate is decreasing: in the next years the growth will be less than in the last years.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
4. Valuation
4.1 Price/Earnings Ratio
The Price/Earnings ratio is 11.24, which indicates a very decent valuation of MRK.
MRK's Price/Earnings ratio is rather cheap when compared to the industry. MRK is cheaper than 89.53% of the companies in the same industry.
MRK is valuated cheaply when we compare the Price/Earnings ratio to 26.76, which is the current average of the S&P500 Index.
With a Price/Forward Earnings ratio of 10.43, the valuation of MRK can be described as very reasonable.
Compared to the rest of the industry, the Price/Forward Earnings ratio of MRK indicates a rather cheap valuation: MRK is cheaper than 86.91% of the companies listed in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 23.96. MRK is valued rather cheaply when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 11.24 | ||
| Fwd PE | 10.43 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, MRK is valued cheaply inside the industry as 89.53% of the companies are valued more expensively.
MRK's Price/Free Cash Flow ratio is rather cheap when compared to the industry. MRK is cheaper than 83.77% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 18.83 | ||
| EV/EBITDA | 9.14 |
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.
PEG (NY)0.6
PEG (5Y)1.4
EPS Next 2Y11.48%
EPS Next 3Y11.36%
5. Dividend
5.1 Amount
MRK has a Yearly Dividend Yield of 3.37%.
Compared to an average industry Dividend Yield of 6.46, MRK pays a better dividend. On top of this MRK pays more dividend than 95.29% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.31, MRK pays a bit more dividend than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.37% |
5.2 History
On average, the dividend of MRK grows each year by 6.90%, which is quite nice.
MRK has paid a dividend for at least 10 years, which is 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
MRK pays out 42.60% of its income as dividend. This is a bit on the high side, but may be sustainable.
The dividend of MRK is growing, but the earnings are growing slower. This means the dividend growth is not sustainable.
DP42.6%
EPS Next 2Y11.48%
EPS Next 3Y11.36%
99.01
+1.39 (+1.42%)
Chartmill FA Rating
GICS SectorHealth Care
GICS IndustryGroupPharmaceuticals, Biotechnology & Life Sciences
GICS IndustryPharmaceuticals
Earnings (Last)
Earnings (Next)
Inst Owners80.3%
Inst Owner Change-0.88%
Ins Owners0.05%
Ins Owner Change-0.55%
Market Cap245.74B
Revenue(TTM)64.23B
Net Income(TTM)19.03B
Analysts76.47
Price Target106.17 (7.23%)
Short Float %1.11%
Short Ratio2.07
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.37% |
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)5.09%
PT rev (3m)4.44%
EPS NQ rev (1m)0.19%
EPS NQ rev (3m)-7.03%
EPS NY rev (1m)0.32%
EPS NY rev (3m)0.61%
Revenue NQ rev (1m)-0.04%
Revenue NQ rev (3m)-0.81%
Revenue NY rev (1m)0.14%
Revenue NY rev (3m)0.05%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 11.24 | ||
| Fwd PE | 10.43 | ||
| P/S | 3.83 | ||
| P/FCF | 18.83 | ||
| P/OCF | 14.4 | ||
| P/B | 4.74 | ||
| P/tB | 16.44 | ||
| EV/EBITDA | 9.14 |
EPS(TTM)8.81
EY8.9%
EPS(NY)9.49
Fwd EY9.59%
FCF(TTM)5.26
FCFY5.31%
OCF(TTM)6.88
OCFY6.94%
SpS25.88
BVpS20.89
TBVpS6.02
PEG (NY)0.6
PEG (5Y)1.4
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 | 3.95 |
F-Score6
WACC8.88%
ROIC/WACC2.16
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 Y18.58%
EPS Next 2Y11.48%
EPS Next 3Y11.36%
EPS Next 5Y5.92%
Revenue 1Y (TTM)1.68%
Revenue growth 3Y9.63%
Revenue growth 5Y10.4%
Sales Q2Q%3.72%
Revenue Next Year1.22%
Revenue Next 2Y3.07%
Revenue Next 3Y3.9%
Revenue Next 5Y2.39%
EBIT growth 1Y2.78%
EBIT growth 3Y15.93%
EBIT growth 5Y19.23%
EBIT Next Year28.1%
EBIT Next 3Y13.81%
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 18.58% 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%.