MERCK & CO. INC. (MRK) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:MRK - US58933Y1055 - Common Stock
105.04 USD
+0.32 (+0.31%)
104.81 USD
-0.23 (-0.22%)
Overall MRK gets a fundamental rating of 7 out of 10. We evaluated MRK against 192 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. 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.
In the past 5 years MRK has always been profitable.
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 94.79% of its industry peers.
MRK's Return On Equity of 36.71% is amongst the best of the industry. MRK outperforms 95.83% of its industry peers.
With an excellent Return On Invested Capital value of 19.15%, MRK belongs to the best of the industry, outperforming 96.35% of the companies in the same industry.
MRK had an Average Return On Invested Capital over the past 3 years of 20.39%. This 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's Profit Margin of 29.63% is amongst the best of the industry. MRK outperforms 94.27% 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 38.08%, 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 (78.72%) than 83.33% 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
MRK has a Return on Invested Capital (ROIC), which is well above the Cost of Capital (WACC), which means it is creating value.
Compared to 1 year ago, MRK has about the same amount of shares outstanding.
Compared to 5 years ago, MRK has less shares outstanding
The debt/assets ratio for MRK has been reduced compared to a year ago.
2.2 Solvency
An Altman-Z score of 4.08 indicates that MRK is not in any danger for bankruptcy at the moment.
The Altman-Z score of MRK (4.08) is better than 70.31% of its industry peers.
The Debt to FCF ratio of MRK is 3.17, which is a good value as it means it would take MRK, 3.17 years of fcf income to pay off all of its debts.
MRK has a better Debt to FCF ratio (3.17) than 88.02% of its industry peers.
A Debt/Equity ratio of 0.77 indicates that MRK is somewhat dependend on debt financing.
The Debt to Equity ratio of MRK (0.77) is worse than 70.31% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.77 | ||
| Debt/FCF | 3.17 | ||
| Altman-Z | 4.08 |
ROIC/WACC2.1
WACC9.1%
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.
Looking at the Current ratio, with a value of 1.66, MRK is doing worse than 67.19% of the companies in the same industry.
MRK has a Quick Ratio of 1.44. 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 (1.44) than 64.06% 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.
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.
The Revenue has been growing slightly by 1.68% 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)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
The Earnings Per Share is expected to grow by 5.92% on average over the next years.
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
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
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 11.92, the valuation of MRK can be described as very reasonable.
MRK's Price/Earnings ratio is rather cheap when compared to the industry. MRK is cheaper than 89.06% of the companies in the same industry.
When comparing the Price/Earnings ratio of MRK to the average of the S&P500 Index (26.50), we can say MRK is valued rather cheaply.
With a Price/Forward Earnings ratio of 11.06, the valuation of MRK can be described as very reasonable.
MRK's Price/Forward Earnings ratio is rather cheap when compared to the industry. MRK is cheaper than 86.46% of the companies in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 23.93. MRK is valued rather cheaply when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 11.92 | ||
| Fwd PE | 11.06 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, MRK is valued cheaper than 89.06% 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 83.85% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 19.98 | ||
| EV/EBITDA | 9.75 |
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)0.64
PEG (5Y)1.48
EPS Next 2Y11.48%
EPS Next 3Y11.36%
5. Dividend
5.1 Amount
MRK has a Yearly Dividend Yield of 3.38%. Purely for dividend investing, there may be better candidates out there.
MRK's Dividend Yield is rather good when compared to the industry average which is at 0.45. MRK pays more dividend than 94.79% of the companies in the same industry.
Compared to an average S&P500 Dividend Yield of 1.87, MRK pays a better dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.38% |
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
42.60% of the earnings are spent on dividend by MRK. This is a bit on the high side, but may be sustainable.
MRK's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP42.6%
EPS Next 2Y11.48%
EPS Next 3Y11.36%
105.04
+0.32 (+0.31%)
Chartmill FA Rating
GICS SectorHealth Care
GICS IndustryGroupPharmaceuticals, Biotechnology & Life Sciences
GICS IndustryPharmaceuticals
Earnings (Last)
Earnings (Next)
Inst Owners80.3%
Inst Owner Change-0.89%
Ins Owners0.05%
Ins Owner Change-0.55%
Market Cap260.71B
Revenue(TTM)64.23B
Net Income(TTM)19.03B
Analysts76.47
Price Target106.17 (1.08%)
Short Float %1.29%
Short Ratio2.47
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.38% |
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)-0.28%
EPS NQ rev (3m)-7%
EPS NY rev (1m)0.32%
EPS NY rev (3m)0.61%
Revenue NQ rev (1m)0.09%
Revenue NQ rev (3m)-0.8%
Revenue NY rev (1m)0.14%
Revenue NY rev (3m)0.05%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 11.92 | ||
| Fwd PE | 11.06 | ||
| P/S | 4.06 | ||
| P/FCF | 19.98 | ||
| P/OCF | 15.28 | ||
| P/B | 5.03 | ||
| P/tB | 17.44 | ||
| EV/EBITDA | 9.75 |
EPS(TTM)8.81
EY8.39%
EPS(NY)9.49
Fwd EY9.04%
FCF(TTM)5.26
FCFY5.01%
OCF(TTM)6.88
OCFY6.55%
SpS25.88
BVpS20.89
TBVpS6.02
PEG (NY)0.64
PEG (5Y)1.48
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 | 4.08 |
F-Score6
WACC9.1%
ROIC/WACC2.1
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%.