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 scores decently on growth, while it is valued quite cheap. This could make an interesting 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.
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 (15.14%) than 96.46% of its industry peers.
MRK has a better Return On Equity (36.07%) than 96.46% of its industry peers.
MRK's Return On Invested Capital of 19.00% is amongst the best of the industry. MRK outperforms 93.94% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for MRK is significantly below the industry average of 41.51%.
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
Looking at the Profit Margin, with a value of 27.27%, MRK belongs to the top of the industry, outperforming 96.46% of the companies in the same industry.
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 33.84%, MRK belongs to the top 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.
MRK has a better Gross Margin (78.17%) than 84.85% of its industry peers.
In the last couple of years the Gross Margin of MRK has grown nicely.
With a Return on Invested Capital (ROIC) well above the Cost of Capital (WACC), MRK is creating value.
MRK has about the same amout of shares outstanding than it did 1 year ago.
Compared to 5 years ago, MRK has less shares outstanding
Compared to 1 year ago, MRK has an improved debt to assets ratio.
2.2 Solvency
MRK has an Altman-Z score of 3.82. This indicates that MRK is financially healthy and has little risk of bankruptcy at the moment.
MRK's Altman-Z score of 3.82 is fine compared to the rest of the industry. MRK outperforms 78.79% of its industry peers.
MRK has a debt to FCF ratio of 2.04. This is a good value and a sign of high solvency as MRK would need 2.04 years to pay back of all of its debts.
MRK has a Debt to FCF ratio of 2.04. This is amongst the best in the industry. MRK outperforms 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.
With a Debt to Equity ratio value of 0.69, MRK is not doing good in the industry: 66.16% of the companies in the same industry are doing better.
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
3.82
ROIC/WACC2.01
WACC9.45%
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.
Looking at the Current ratio, with a value of 1.41, MRK is doing worse than 73.74% of the companies in the same industry.
A Quick Ratio of 1.16 indicates that MRK should not have too much problems paying its short term obligations.
MRK has a Quick ratio of 1.16. This is in the lower half of the industry: MRK underperforms 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.
A Price/Earnings ratio of 9.49 indicates a reasonable valuation of MRK.
Based on the Price/Earnings ratio, MRK is valued cheaply inside the industry as 90.40% of the companies are valued more expensively.
The average S&P500 Price/Earnings ratio is at 24.95. MRK is valued rather cheaply when compared to this.
MRK is valuated cheaply with a Price/Forward Earnings ratio of 7.40.
89.90% of the companies in the same industry are more expensive than MRK, based on the Price/Forward Earnings ratio.
Compared to an average S&P500 Price/Forward Earnings ratio of 20.99, MRK is valued rather cheaply.
Industry Rank
Sector Rank
PE
9.49
Fwd PE
7.4
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 85.86% of the companies listed 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 89.39% of the companies listed in the same industry.
Industry Rank
Sector Rank
P/FCF
10.92
EV/EBITDA
8.3
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.
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 4.19, MRK pays a better dividend. On top of this MRK pays more dividend than 94.95% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.41, MRK pays a better dividend.
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.