MERCK & CO. INC. (MRK) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:MRK - US58933Y1055 - Common Stock
106.78 USD
+0.33 (+0.31%)
107 USD
+0.22 (+0.21%)
Overall MRK gets a fundamental rating of 7 out of 10. We evaluated MRK against 191 industry peers in the Pharmaceuticals industry. MRK has an excellent profitability rating, 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
MRK had positive earnings in the past year.
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 better Return On Assets (14.69%) than 94.76% of its industry peers.
With an excellent Return On Equity value of 36.71%, MRK belongs to the best of the industry, outperforming 95.81% of the companies in the same industry.
MRK has a better Return On Invested Capital (19.15%) than 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.
MRK's Operating Margin has improved in the last couple of years.
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.
The number of shares outstanding for MRK remains at a similar level compared to 1 year ago.
MRK has less shares outstanding than it did 5 years ago.
Compared to 1 year ago, MRK has an improved debt to assets ratio.
2.2 Solvency
An Altman-Z score of 4.12 indicates that MRK is not in any danger for bankruptcy at the moment.
The Altman-Z score of MRK (4.12) is better than 70.68% 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 Debt to FCF ratio of 3.17. This is amongst the best in the industry. MRK outperforms 87.96% 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.
Looking at the Debt to Equity ratio, with a value of 0.77, MRK is doing worse than 70.68% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.77 | ||
| Debt/FCF | 3.17 | ||
| Altman-Z | 4.12 |
ROIC/WACC2.12
WACC9.05%
2.3 Liquidity
A Current Ratio of 1.66 indicates that MRK should not have too much problems paying its short term obligations.
MRK's Current ratio of 1.66 is on the low side compared to the rest of the industry. MRK is outperformed by 67.54% of its industry peers.
A Quick Ratio of 1.44 indicates that MRK should not have too much problems paying its short term obligations.
Looking at the Quick ratio, with a value of 1.44, MRK is doing worse than 64.40% of the companies in the same industry.
| 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.
The Revenue has been growing slightly by 1.68% in the past 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
MRK is expected to show a small growth in Earnings Per Share. In the coming years, the EPS will grow by 5.92% yearly.
MRK is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 2.39% yearly.
EPS Next Y18.62%
EPS Next 2Y9.96%
EPS Next 3Y10.87%
EPS Next 5Y5.92%
Revenue Next Year1.24%
Revenue Next 2Y3.07%
Revenue Next 3Y3.84%
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.
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
Based on the Price/Earnings ratio of 12.12, the valuation of MRK can be described as correct.
Compared to the rest of the industry, the Price/Earnings ratio of MRK indicates a rather cheap valuation: MRK is cheaper than 87.96% of the companies listed in the same industry.
MRK's Price/Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 26.92.
Based on the Price/Forward Earnings ratio of 11.56, the valuation of MRK can be described as reasonable.
85.34% of the companies in the same industry are more expensive than MRK, based on the Price/Forward Earnings ratio.
MRK's Price/Forward Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 23.46.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 12.12 | ||
| Fwd PE | 11.56 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of MRK indicates a rather cheap valuation: MRK is cheaper than 89.53% of the companies listed in the same industry.
Based on the Price/Free Cash Flow ratio, MRK is valued cheaper than 84.29% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 20.31 | ||
| EV/EBITDA | 9.93 |
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.
The excellent profitability rating of MRK may justify a higher PE ratio.
PEG (NY)0.65
PEG (5Y)1.51
EPS Next 2Y9.96%
EPS Next 3Y10.87%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 3.10%, MRK has a reasonable but not impressive dividend return.
Compared to an average industry Dividend Yield of 0.61, MRK pays a better dividend. On top of this MRK pays more dividend than 95.29% of the companies listed in the same industry.
MRK's Dividend Yield is rather good when compared to the S&P500 average which is at 2.00.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.1% |
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.
MRK's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP42.6%
EPS Next 2Y9.96%
EPS Next 3Y10.87%
106.78
+0.33 (+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 Cap265.03B
Revenue(TTM)64.23B
Net Income(TTM)19.03B
Analysts76.47
Price Target110.37 (3.36%)
Short Float %1.29%
Short Ratio2.47
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.1% |
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)7.87%
PT rev (3m)8.57%
EPS NQ rev (1m)-0.08%
EPS NQ rev (3m)-6.86%
EPS NY rev (1m)0.35%
EPS NY rev (3m)0.58%
Revenue NQ rev (1m)0.02%
Revenue NQ rev (3m)-0.78%
Revenue NY rev (1m)0.16%
Revenue NY rev (3m)0.06%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 12.12 | ||
| Fwd PE | 11.56 | ||
| P/S | 4.13 | ||
| P/FCF | 20.31 | ||
| P/OCF | 15.53 | ||
| P/B | 5.11 | ||
| P/tB | 17.73 | ||
| EV/EBITDA | 9.93 |
EPS(TTM)8.81
EY8.25%
EPS(NY)9.24
Fwd EY8.65%
FCF(TTM)5.26
FCFY4.92%
OCF(TTM)6.88
OCFY6.44%
SpS25.88
BVpS20.89
TBVpS6.02
PEG (NY)0.65
PEG (5Y)1.51
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 | 4.12 |
F-Score6
WACC9.05%
ROIC/WACC2.12
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 Y18.62%
EPS Next 2Y9.96%
EPS Next 3Y10.87%
EPS Next 5Y5.92%
Revenue 1Y (TTM)1.68%
Revenue growth 3Y9.63%
Revenue growth 5Y10.4%
Sales Q2Q%3.72%
Revenue Next Year1.24%
Revenue Next 2Y3.07%
Revenue Next 3Y3.84%
Revenue Next 5Y2.39%
EBIT growth 1Y2.78%
EBIT growth 3Y15.93%
EBIT growth 5Y19.23%
EBIT Next Year28.15%
EBIT Next 3Y13.73%
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 8 / 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 18.62% 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%.