MERCK & CO. INC. (MRK) Stock Fundamental Analysis
USA - NYSE:MRK - US58933Y1055 - Common Stock
86.28 USD
-0.3 (-0.35%)
86.15 USD
-0.13 (-0.15%)
We assign a fundamental rating of 7 out of 10 to MRK. MRK was compared to 192 industry peers in the Pharmaceuticals industry. MRK gets an excellent profitability rating and is at the same time showing great financial health properties. MRK may be a bit undervalued, certainly considering the very reasonable score on growth Finally MRK also has an excellent dividend rating. These ratings would make MRK suitable for value and dividend investing!
1. Profitability
1.1 Basic Checks
In the past year MRK was profitable.
In the past year MRK had a positive cash flow from operations.
MRK had positive earnings in each of the past 5 years.
In the past 5 years MRK always reported a positive cash flow from operatings.
1.2 Ratios
MRK has a Return On Assets of 13.96%. This is amongst the best in the industry. MRK outperforms 95.31% of its industry peers.
With an excellent Return On Equity value of 33.49%, MRK belongs to the best of the industry, outperforming 96.35% of the companies in the same industry.
MRK has a better Return On Invested Capital (20.61%) than 96.35% of its industry peers.
The Average Return On Invested Capital over the past 3 years for MRK is above the industry average of 15.40%.
The last Return On Invested Capital (20.61%) for MRK is above the 3 year average (20.39%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 13.96% | ||
| ROE | 33.49% | ||
| ROIC | 20.61% |
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 (25.79%) than 95.83% of its industry peers.
In the last couple of years the Profit Margin of MRK has remained more or less at the same level.
Looking at the Operating Margin, with a value of 37.52%, MRK belongs to the top 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 (78.32%) than 84.38% of its industry peers.
MRK's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 37.52% | ||
| PM (TTM) | 25.79% | ||
| GM | 78.32% |
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.
Compared to 1 year ago, MRK has about the same amount of shares outstanding.
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
An Altman-Z score of 4.03 indicates that MRK is not in any danger for bankruptcy at the moment.
MRK has a Altman-Z score of 4.03. This is in the better half of the industry: MRK outperforms 73.96% of its industry peers.
The Debt to FCF ratio of MRK is 2.40, which is a good value as it means it would take MRK, 2.40 years of fcf income to pay off all of its debts.
The Debt to FCF ratio of MRK (2.40) is better than 91.67% of its industry peers.
MRK has a Debt/Equity ratio of 0.69. This is a neutral value indicating MRK is somewhat dependend on debt financing.
MRK's Debt to Equity ratio of 0.69 is on the low side compared to the rest of the industry. MRK is outperformed by 68.23% of its industry peers.
Even though the debt/equity ratio score it not favorable for MRK, it has very limited outstanding debt, so we won't put too much weight on the DE evaluation.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.69 | ||
| Debt/FCF | 2.4 | ||
| Altman-Z | 4.03 |
ROIC/WACC2.43
WACC8.48%
2.3 Liquidity
MRK has a Current Ratio of 1.42. 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 Current ratio (1.42) than 70.31% of its industry peers.
A Quick Ratio of 1.17 indicates that MRK should not have too much problems paying its short term obligations.
The Quick ratio of MRK (1.17) is worse than 70.31% of its industry peers.
The current and quick ratio evaluation for MRK is rather negative, while it does have excellent solvency and profitability. These ratios do not necessarly indicate liquidity issues and need to be evaluated against the specifics of the business.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.42 | ||
| Quick Ratio | 1.17 |
3. Growth
3.1 Past
MRK shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 18.28%, which is quite good.
MRK shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 8.04% yearly.
The Revenue has been growing slightly by 1.82% 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)18.28%
EPS 3Y6.87%
EPS 5Y8.04%
EPS Q2Q%-3.95%
Revenue 1Y (TTM)1.82%
Revenue growth 3Y9.63%
Revenue growth 5Y10.4%
Sales Q2Q%-1.9%
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 5.58% on average per year.
Based on estimates for the next years, MRK will show a small growth in Revenue. The Revenue will grow by 1.93% on average per year.
EPS Next Y17.76%
EPS Next 2Y12.25%
EPS Next 3Y11.69%
EPS Next 5Y5.58%
Revenue Next Year1.02%
Revenue Next 2Y3.04%
Revenue Next 3Y3.96%
Revenue Next 5Y1.93%
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
With a Price/Earnings ratio of 11.21, the valuation of MRK can be described as very reasonable.
90.10% of the companies in the same industry are more expensive than MRK, based on the Price/Earnings ratio.
MRK's Price/Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 26.19.
A Price/Forward Earnings ratio of 8.96 indicates a reasonable valuation of MRK.
Compared to the rest of the industry, the Price/Forward Earnings ratio of MRK indicates a rather cheap valuation: MRK is cheaper than 86.46% of the companies listed in the same industry.
When comparing the Price/Forward Earnings ratio of MRK to the average of the S&P500 Index (22.50), we can say MRK is valued rather cheaply.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 11.21 | ||
| Fwd PE | 8.96 |
4.2 Price Multiples
90.63% of the companies in the same industry are more expensive than MRK, based on the Enterprise Value to EBITDA ratio.
MRK's Price/Free Cash Flow ratio is rather cheap when compared to the industry. MRK is cheaper than 87.50% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 14.64 | ||
| EV/EBITDA | 8.52 |
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.
MRK has an outstanding profitability rating, which may justify a higher PE ratio.
PEG (NY)0.63
PEG (5Y)1.39
EPS Next 2Y12.25%
EPS Next 3Y11.69%
5. Dividend
5.1 Amount
MRK has a Yearly Dividend Yield of 3.72%.
MRK's Dividend Yield is rather good when compared to the industry average which is at 6.29. MRK pays more dividend than 95.83% of the companies in the same industry.
Compared to an average S&P500 Dividend Yield of 2.33, MRK pays a better dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.72% |
5.2 History
The dividend of MRK is nicely growing with an annual growth rate of 6.90%!
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
48.95% of the earnings are spent on dividend by MRK. 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.
DP48.95%
EPS Next 2Y12.25%
EPS Next 3Y11.69%
86.28
-0.3 (-0.35%)
Chartmill FA Rating
GICS SectorHealth Care
GICS IndustryGroupPharmaceuticals, Biotechnology & Life Sciences
GICS IndustryPharmaceuticals
Earnings (Last)
Earnings (Next)
Inst Owners80.53%
Inst Owner Change0.18%
Ins Owners0.05%
Ins Owner Change0.36%
Market Cap215.51B
Revenue(TTM)63.62B
Net Income(TTM)16.41B
Analysts75.76
Price Target101.49 (17.63%)
Short Float %1.07%
Short Ratio2.2
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.72% |
Yearly Dividend3.1
Dividend Growth(5Y)6.9%
DP48.95%
Div Incr Years14
Div Non Decr Years34
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)5.31%
Min EPS beat(2)2.93%
Max EPS beat(2)7.69%
EPS beat(4)4
Avg EPS beat(4)4.85%
Min EPS beat(4)2.93%
Max EPS beat(4)7.69%
EPS beat(8)8
Avg EPS beat(8)21.1%
EPS beat(12)12
Avg EPS beat(12)15.97%
EPS beat(16)16
Avg EPS beat(16)15.3%
Revenue beat(2)1
Avg Revenue beat(2)-0.54%
Min Revenue beat(2)-1.54%
Max Revenue beat(2)0.45%
Revenue beat(4)2
Avg Revenue beat(4)-0.25%
Min Revenue beat(4)-1.54%
Max Revenue beat(4)0.45%
Revenue beat(8)5
Avg Revenue beat(8)0.7%
Revenue beat(12)9
Avg Revenue beat(12)1.51%
Revenue beat(16)13
Avg Revenue beat(16)2.28%
PT rev (1m)-0.16%
PT rev (3m)-1.61%
EPS NQ rev (1m)-0.53%
EPS NQ rev (3m)-3.69%
EPS NY rev (1m)-0.14%
EPS NY rev (3m)0.33%
Revenue NQ rev (1m)-0.46%
Revenue NQ rev (3m)-0.89%
Revenue NY rev (1m)-0.15%
Revenue NY rev (3m)-0.48%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 11.21 | ||
| Fwd PE | 8.96 | ||
| P/S | 3.39 | ||
| P/FCF | 14.64 | ||
| P/OCF | 11.63 | ||
| P/B | 4.4 | ||
| P/tB | 17.65 | ||
| EV/EBITDA | 8.52 |
EPS(TTM)7.7
EY8.92%
EPS(NY)9.63
Fwd EY11.16%
FCF(TTM)5.89
FCFY6.83%
OCF(TTM)7.42
OCFY8.6%
SpS25.47
BVpS19.61
TBVpS4.89
PEG (NY)0.63
PEG (5Y)1.39
Graham Number58.29
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 13.96% | ||
| ROE | 33.49% | ||
| ROCE | 26.09% | ||
| ROIC | 20.61% | ||
| ROICexc | 22.76% | ||
| ROICexgc | 40.92% | ||
| OM | 37.52% | ||
| PM (TTM) | 25.79% | ||
| GM | 78.32% | ||
| FCFM | 23.14% |
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-Score7
Asset Turnover0.54
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.69 | ||
| Debt/FCF | 2.4 | ||
| Debt/EBITDA | 1.19 | ||
| Cap/Depr | 82.85% | ||
| Cap/Sales | 5.99% | ||
| Interest Coverage | 17.88 | ||
| Cash Conversion | 65.1% | ||
| Profit Quality | 89.74% | ||
| Current Ratio | 1.42 | ||
| Quick Ratio | 1.17 | ||
| Altman-Z | 4.03 |
F-Score7
WACC8.48%
ROIC/WACC2.43
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)18.28%
EPS 3Y6.87%
EPS 5Y8.04%
EPS Q2Q%-3.95%
EPS Next Y17.76%
EPS Next 2Y12.25%
EPS Next 3Y11.69%
EPS Next 5Y5.58%
Revenue 1Y (TTM)1.82%
Revenue growth 3Y9.63%
Revenue growth 5Y10.4%
Sales Q2Q%-1.9%
Revenue Next Year1.02%
Revenue Next 2Y3.04%
Revenue Next 3Y3.96%
Revenue Next 5Y1.93%
EBIT growth 1Y1.85%
EBIT growth 3Y15.93%
EBIT growth 5Y19.23%
EBIT Next Year29.99%
EBIT Next 3Y15.06%
EBIT Next 5Y9.07%
FCF growth 1Y35.96%
FCF growth 3Y23.27%
FCF growth 5Y12.67%
OCF growth 1Y22.95%
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 17.76% 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 48.95%.