New York Stock Exchange, Inc. / Health Care / Pharmaceuticals
Technical Analysis
Fundamental Analysis
Analyst Ratings, Profile & Chart
Fundamental Rating
Taking everything into account, MRK scores 7 out of 10 in our fundamental rating. MRK was compared to 198 industry peers in the Pharmaceuticals industry. MRK has outstanding health and profitabily ratings, belonging to the best of the industry. This is a solid base for any company. MRK is valued quite cheap, while showing a decent growth score. This is a good combination! MRK also has an excellent dividend rating. With these ratings, MRK could be worth investigating further for value and dividend and quality investing!.
1. Profitability
1.1 Basic Checks
In the past year MRK was profitable.
MRK had a positive operating cash flow in the past year.
In the past 5 years MRK has always been profitable.
Each year in the past 5 years MRK had a positive operating cash flow.
1.2 Ratios
The Return On Assets of MRK (15.14%) is better than 96.46% of its industry peers.
With an excellent Return On Equity value of 36.07%, MRK belongs to the best of the industry, outperforming 96.46% of the companies in the same industry.
With an excellent Return On Invested Capital value of 19.00%, MRK belongs to the best of the industry, outperforming 93.94% of the companies in the same industry.
MRK had an Average Return On Invested Capital over the past 3 years of 20.13%. This is significantly below the industry average of 41.57%.
Industry Rank
Sector Rank
ROA
15.14%
ROE
36.07%
ROIC
19%
ROA(3y)9.42%
ROA(5y)9.66%
ROE(3y)23.17%
ROE(5y)26.32%
ROIC(3y)20.13%
ROIC(5y)17.77%
1.3 Margins
MRK's Profit Margin of 27.27% is amongst the best of the industry. MRK outperforms 96.46% of its industry peers.
MRK's Profit Margin has been stable in the last couple of years.
With an excellent Operating Margin value of 33.84%, MRK belongs to the best of the industry, outperforming 94.95% of the companies in the same industry.
In the last couple of years the Operating Margin of MRK has grown nicely.
The Gross Margin of MRK (78.17%) is better than 84.85% of its industry peers.
In the last couple of years the Gross Margin of MRK has grown nicely.
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.
MRK has a better debt/assets ratio than last year.
2.2 Solvency
An Altman-Z score of 3.91 indicates that MRK is not in any danger for bankruptcy at the moment.
The Altman-Z score of MRK (3.91) is better than 79.29% of its industry peers.
The Debt to FCF ratio of MRK is 2.04, which is a good value as it means it would take MRK, 2.04 years of fcf income to pay off all of its debts.
MRK has a better Debt to FCF ratio (2.04) than 93.94% 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 has a worse Debt to Equity ratio (0.69) than 66.16% 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
2.04
Altman-Z
3.91
ROIC/WACC2.02
WACC9.41%
2.3 Liquidity
MRK has a Current Ratio of 1.41. This is a normal value and indicates that MRK is financially healthy and should not expect problems in meeting its short term obligations.
With a Current ratio value of 1.41, MRK is not doing good in the industry: 73.74% of the companies in the same industry are doing better.
A Quick Ratio of 1.16 indicates that MRK should not have too much problems paying its short term obligations.
The Quick ratio of MRK (1.16) is worse than 73.23% of its industry peers.
MRK does not score too well on the current and quick ratio evaluation. However, as it has excellent solvency and profitability, these ratios do not necessarly indicate liquidity issues and need to be evaluated against the specifics of the business.
Based on the Price/Earnings ratio of 9.95, the valuation of MRK can be described as reasonable.
MRK's Price/Earnings ratio is rather cheap when compared to the industry. MRK is cheaper than 90.40% of the companies in the same industry.
Compared to an average S&P500 Price/Earnings ratio of 24.83, MRK is valued rather cheaply.
With a Price/Forward Earnings ratio of 7.76, the valuation of MRK can be described as very cheap.
MRK's Price/Forward Earnings ratio is rather cheap when compared to the industry. MRK is cheaper than 89.90% of the companies in the same industry.
When comparing the Price/Forward Earnings ratio of MRK to the average of the S&P500 Index (20.94), we can say MRK is valued rather cheaply.
Industry Rank
Sector Rank
PE
9.95
Fwd PE
7.76
4.2 Price Multiples
MRK's Enterprise Value to EBITDA ratio is rather cheap when compared to the industry. MRK is cheaper than 85.86% of the companies in the same industry.
88.89% of the companies in the same industry are more expensive than MRK, based on the Price/Free Cash Flow ratio.
Industry Rank
Sector Rank
P/FCF
11.44
EV/EBITDA
8.67
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.
A more expensive valuation may be justified as MRK's earnings are expected to grow with 13.30% in the coming years.
With a Yearly Dividend Yield of 4.17%, MRK is a good candidate for dividend investing.
Compared to an average industry Dividend Yield of 4.22, MRK pays a better dividend. On top of this MRK pays more dividend than 94.95% 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 2.41.
Industry Rank
Sector Rank
Dividend Yield
4.17%
5.2 History
On average, the dividend of MRK grows each year by 6.90%, which is quite nice.
MRK has been paying a dividend for at least 10 years, so it has 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 Years13
Div Non Decr Years33
5.3 Sustainability
45.54% 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.