Stock Analysis: Best Dividend Stocks

Fundamental Rating

MRK gets a fundamental rating of 7 out of 10. The analysis compared the fundamentals against 198 industry peers in the Pharmaceuticals industry. MRK scores excellent points on both the profitability and health parts. This is a solid base for a good stock. A decent growth rate in combination with a cheap valuation! Better keep an eye on MRK. 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

MRK had positive earnings in the past year.

In the past year MRK had a positive cash flow from operations.

Each year in the past 5 years MRK has been profitable.

MRK had a positive operating cash flow in each of the past 5 years.

1.2 Ratios

The Return On Assets of MRK (15.14%) is better than 96.46% of its industry peers.

MRK has a better Return On Equity (36.07%) than 96.46% of its industry peers.

Looking at the Return On Invested Capital, with a value of 19.00%, MRK belongs to the top of the industry, outperforming 93.94% of the companies in the same industry.

The Average Return On Invested Capital over the past 3 years for MRK 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

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.

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.

MRK has a Gross Margin of 78.17%. This is amongst the best in the industry. MRK outperforms 84.85% of its industry peers.

MRK's Gross Margin has improved in the last couple of years.

		Industry Rank	Sector Rank
OM	33.84%
PM (TTM)	27.27%
GM	78.17%

OM growth 3Y4.43%

OM growth 5Y7.18%

PM growth 3Y-0.15%

PM growth 5Y1.18%

GM growth 3Y3.55%

GM growth 5Y2.42%

More info and screens

ROA

ROE

ROIC

Operating and Profit Margin

Show most profitable peers

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.

MRK has less shares outstanding than it did 5 years ago.

MRK has a better debt/assets ratio than last year.

2.2 Solvency

An Altman-Z score of 3.80 indicates that MRK is not in any danger for bankruptcy at the moment.

MRK's Altman-Z score of 3.80 is fine compared to the rest of the industry. MRK outperforms 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's Debt to FCF ratio of 2.04 is amongst the best of the industry. MRK outperforms 93.43% 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's Debt to Equity ratio of 0.69 is on the low side compared to the rest of the industry. MRK is outperformed by 66.16% of its industry peers.

Although MRK does not score too well on debt/equity it has very limited outstanding debt, which is well covered by the FCF. We will not put too much weight on the debt/equity number as it may be because of low equity, which could be a consequence of a share buyback program for instance. This needs to be investigated.

		Industry Rank	Sector Rank
Debt/Equity	0.69
Debt/FCF	2.04
Altman-Z	3.8

ROIC/WACC2.02

WACC9.4%

2.3 Liquidity

A Current Ratio of 1.41 indicates that MRK should not have too much problems paying 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.

		Industry Rank	Sector Rank
Current Ratio	1.41
Quick Ratio	1.16

More info and screens

WACC

Debt/Equity

How to determine the health of a company

Altman-Z score

Show peers with great health

3. Growth

3.1 Past

The Earnings Per Share has grown by an impressive 258.99% over the past year.

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 4.10% in the past year.

Measured over the past years, MRK shows a quite strong growth in Revenue. The Revenue has been growing by 10.40% on average per year.

EPS 1Y (TTM)258.99%

EPS 3Y6.87%

EPS 5Y8.04%

EPS Q2Q%7.25%

Revenue 1Y (TTM)4.1%

Revenue growth 3Y9.63%

Revenue growth 5Y10.4%

Sales Q2Q%-1.56%

3.2 Future

Based on estimates for the next years, MRK will show a small growth in Earnings Per Share. The EPS will grow by 6.16% on average per year.

Based on estimates for the next years, MRK will show a small growth in Revenue. The Revenue will grow by 2.43% on average per year.

EPS Next Y18.6%

EPS Next 2Y14.32%

EPS Next 3Y13.3%

EPS Next 5Y6.16%

Revenue Next Year1.76%

Revenue Next 2Y3.73%

Revenue Next 3Y4.39%

Revenue Next 5Y2.43%

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.

More info and screens

Find the best growth stocks

Show best growing peers

4. Valuation

4.1 Price/Earnings Ratio

A Price/Earnings ratio of 10.32 indicates a reasonable valuation of MRK.

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.

When comparing the Price/Earnings ratio of MRK to the average of the S&P500 Index (24.83), we can say MRK is valued rather cheaply.

A Price/Forward Earnings ratio of 8.06 indicates a reasonable valuation of MRK.

MRK's Price/Forward Earnings ratio is rather cheap when compared to the industry. MRK is cheaper than 90.40% of the companies in the same industry.

MRK is valuated cheaply when we compare the Price/Forward Earnings ratio to 20.94, which is the current average of the S&P500 Index.

		Industry Rank	Sector Rank
PE	10.32
Fwd PE	8.06

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.

Based on the Price/Free Cash Flow ratio, MRK is valued cheaply inside the industry as 89.39% of the companies are valued more expensively.

		Industry Rank	Sector Rank
P/FCF	11.88
EV/EBITDA	8.24

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.

MRK's earnings are expected to grow with 13.30% in the coming years. This may justify a more expensive valuation.

PEG (NY)0.56

PEG (5Y)1.28

EPS Next 2Y14.32%

EPS Next 3Y13.3%

More info and screens

Show best valued peers

5. Dividend

5.1 Amount

MRK has a Yearly Dividend Yield of 4.17%, which is a nice return.

MRK's Dividend Yield is rather good when compared to the industry average which is at 4.22. MRK pays more dividend than 94.95% of the companies 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

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 Years13

Div Non Decr Years33

5.3 Sustainability

MRK pays out 45.54% 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.

DP45.54%

EPS Next 2Y14.32%

EPS Next 3Y13.3%

More info and screens

Find the best dividend stocks

Show peers with best dividend

New York Stock Exchange, Inc. / Health Care / Pharmaceuticals

1. Profitability

1.1 Basic Checks

1.2 Ratios

1.3 Margins

More info and screens

2. Health

2.1 Basic Checks

2.2 Solvency

2.3 Liquidity

More info and screens

3. Growth

3.1 Past

3.2 Future

3.3 Evolution

More info and screens

4. Valuation

4.1 Price/Earnings Ratio

4.2 Price Multiples

4.3 Compensation for Growth

More info and screens

5. Dividend

5.1 Amount

5.2 History

5.3 Sustainability

More info and screens