MERCK & CO. INC. (MRK) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:MRK - US58933Y1055 - Common Stock
107.4 USD
-0.78 (-0.72%)
107.43 USD
+0.03 (+0.03%)
MRK gets a fundamental rating of 7 out of 10. The analysis compared the fundamentals against 190 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
- 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.
- MRK had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
- MRK has a Return On Assets of 14.69%. This is amongst the best in the industry. MRK outperforms 94.74% of its industry peers.
- MRK's Return On Equity of 36.71% is amongst the best of the industry. MRK outperforms 95.79% of its industry peers.
- Looking at the Return On Invested Capital, with a value of 19.15%, MRK belongs to the top of the industry, outperforming 96.32% of the companies in the same industry.
- The Average Return On Invested Capital over the past 3 years for MRK is significantly above the industry average of 12.83%.
| 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's Profit Margin of 29.63% is amongst the best of the industry. MRK outperforms 94.21% of its industry peers.
- MRK's Profit Margin has been stable in the last couple of years.
- MRK's Operating Margin of 38.08% is amongst the best of the industry. MRK outperforms 96.32% of its industry peers.
- In the last couple of years the Operating Margin of MRK has grown nicely.
- MRK has a Gross Margin of 78.72%. This is amongst the best in the industry. MRK outperforms 83.68% of its industry peers.
- MRK's Gross Margin has been stable in the last couple of years.
| 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.
- The debt/assets ratio for MRK has been reduced compared to a year ago.
2.2 Solvency
- An Altman-Z score of 4.15 indicates that MRK is not in any danger for bankruptcy at the moment.
- The Altman-Z score of MRK (4.15) is better than 68.95% 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's Debt to FCF ratio of 3.17 is amongst the best of the industry. MRK outperforms 88.42% of its industry peers.
- 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 70.00% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.77 | ||
| Debt/FCF | 3.17 | ||
| Altman-Z | 4.15 |
ROIC/WACC2.11
WACC9.08%
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 67.89% of its industry peers.
- A Quick Ratio of 1.44 indicates that MRK should not have too much problems paying its short term obligations.
- MRK has a Quick ratio of 1.44. This is in the lower half of the industry: MRK underperforms 64.21% 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.
- MRK shows a small growth in Revenue. In the last year, the Revenue has grown by 1.68%.
- Measured over the past years, MRK shows a quite strong growth in Revenue. The Revenue has been growing by 10.40% on average per year.
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 6.65% on average per year.
- The Revenue is expected to grow by 2.64% on average over the next years.
EPS Next Y18.51%
EPS Next 2Y-13.49%
EPS Next 3Y10.11%
EPS Next 5Y6.65%
Revenue Next Year1.23%
Revenue Next 2Y2.83%
Revenue Next 3Y3.72%
Revenue Next 5Y2.64%
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 stable.
- 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 12.19, MRK is valued correctly.
- 87.89% of the companies in the same industry are more expensive than MRK, based on the Price/Earnings ratio.
- Compared to an average S&P500 Price/Earnings ratio of 27.25, MRK is valued rather cheaply.
- With a Price/Forward Earnings ratio of 18.78, MRK is valued on the expensive side.
- MRK's Price/Forward Earnings ratio is a bit cheaper when compared to the industry. MRK is cheaper than 78.42% of the companies in the same industry.
- MRK's Price/Forward Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 25.98.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 12.19 | ||
| Fwd PE | 18.78 |
4.2 Price Multiples
- MRK's Enterprise Value to EBITDA ratio is rather cheap when compared to the industry. MRK is cheaper than 89.47% of the companies in the same industry.
- Compared to the rest of the industry, the Price/Free Cash Flow ratio of MRK indicates a rather cheap valuation: MRK is cheaper than 84.74% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 20.43 | ||
| EV/EBITDA | 10.05 |
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.
- MRK has an outstanding profitability rating, which may justify a higher PE ratio.
PEG (NY)0.66
PEG (5Y)1.52
EPS Next 2Y-13.49%
EPS Next 3Y10.11%
5. Dividend
5.1 Amount
- With a Yearly Dividend Yield of 3.11%, 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 0.46. MRK pays more dividend than 95.26% of the companies in the same industry.
- MRK's Dividend Yield is rather good when compared to the S&P500 average which is at 1.82.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.11% |
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 their dividend for at least 10 years, which is a reliable track record.
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 2Y-13.49%
EPS Next 3Y10.11%
MERCK & CO. INC. / MRK FAQ
What is the fundamental rating for MRK stock?
ChartMill assigns a fundamental rating of 7 / 10 to MRK.
Can you provide the valuation status for MERCK & CO. INC.?
ChartMill assigns a valuation rating of 7 / 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.
What is the financial health of MERCK & CO. INC. (MRK) stock?
The financial health rating of MERCK & CO. INC. (MRK) is 6 / 10.
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%.