Investors should take notice of NYSE:MRK—it offers a great deal for the fundamentals it presents.

Discover MERCK & CO. INC. (NYSE:MRK), an undervalued stock highlighted by our stock screener. NYSE:MRK showcases solid financial health and profitability while maintaining an appealing valuation. We'll explore the details.

Deciphering NYSE:MRK's Valuation Rating

ChartMill employs its own Valuation Rating system for all stocks. This score, ranging from 0 to 10, is determined by evaluating different valuation factors, including price to earnings and free cash flow, both in absolute terms and relative to the market and industry. NYSE:MRK has earned a 7 for valuation:

• Compared to the rest of the industry, the Price/Earnings ratio of MRK indicates a somewhat cheap valuation: MRK is cheaper than 79.70% of the companies listed in the same industry.
• MRK's Price/Forward Earnings ratio is rather cheap when compared to the industry. MRK is cheaper than 83.66% of the companies in the same industry.
• MRK is valuated rather cheaply when we compare the Price/Forward Earnings ratio to 21.44, which is the current average of the S&P500 Index.
• Based on the Enterprise Value to EBITDA ratio, MRK is valued a bit cheaper than 78.71% of the companies in the same industry.
• MRK's Price/Free Cash Flow ratio is rather cheap when compared to the industry. MRK is cheaper than 81.19% of the companies in the same industry.
• MRK's low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
• MRK has a very decent profitability rating, which may justify a higher PE ratio.
• MRK's earnings are expected to grow with 89.34% in the coming years. This may justify a more expensive valuation.

How do we evaluate the Profitability for NYSE:MRK?

Discover ChartMill's exclusive Profitability Rating, a proprietary metric that assesses stocks on a scale of 0 to 10. It takes into consideration various profitability ratios and margins, both in absolute terms and relative to industry peers. Notably, NYSE:MRK has achieved a 7:

• With an excellent Return On Assets value of 4.32%, MRK belongs to the best of the industry, outperforming 89.11% of the companies in the same industry.
• MRK has a Return On Equity of 11.17%. This is amongst the best in the industry. MRK outperforms 90.59% of its industry peers.
• Looking at the Return On Invested Capital, with a value of 8.70%, MRK belongs to the top of the industry, outperforming 88.12% of the companies in the same industry.
• MRK has a Profit Margin of 7.77%. This is amongst the best in the industry. MRK outperforms 87.62% of its industry peers.
• MRK's Operating Margin of 15.53% is amongst the best of the industry. MRK outperforms 85.64% of its industry peers.
• MRK has a better Gross Margin (73.09%) than 81.68% of its industry peers.
• In the last couple of years the Gross Margin of MRK has grown nicely.

Evaluating Health: NYSE:MRK

Every stock is evaluated by ChartMill, receiving a Health Rating on a scale of 0 to 10. This assessment considers different health aspects, including liquidity and solvency, both in absolute terms and relative to industry peers. NYSE:MRK has achieved a 5 out of 10:

• An Altman-Z score of 4.62 indicates that MRK is not in any danger for bankruptcy at the moment.
• MRK has a better Altman-Z score (4.62) than 79.21% of its industry peers.
• MRK has a debt to FCF ratio of 2.65. This is a good value and a sign of high solvency as MRK would need 2.65 years to pay back of all of its debts.
• MRK has a better Debt to FCF ratio (2.65) than 90.59% of its industry peers.

How We Gauge Growth for NYSE:MRK

ChartMill employs its own Growth Rating system for all stocks. This score, ranging from 0 to 10, is derived by evaluating different growth factors, such as EPS and revenue growth, taking into account both past performance and future projections. NYSE:MRK has earned a 4 for growth:

• Based on estimates for the next years, MRK will show a very strong growth in Earnings Per Share. The EPS will grow by 50.72% on average per year.
• When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.

More Decent Value stocks can be found in our Decent Value screener.

Check the latest full fundamental report of MRK for a complete fundamental analysis.

Disclaimer

This is not investing advice! The article highlights some of the observations at the time of writing, but you should always make your own analysis and invest based on your own insights.