MERCK & CO. INC. (MRK) Stock Fundamental Analysis
NYSE:MRK - US58933Y1055 - Common Stock
85.3754 USD
-1.99 (-2.28%)
We assign a fundamental rating of 7 out of 10 to MRK. MRK was compared to 193 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. These ratings could make MRK a good candidate for value and dividend investing.
1. Profitability
1.1 Basic Checks
In the past year MRK was profitable.
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 Return On Assets of 13.96%. This is amongst the best in the industry. MRK outperforms 94.82% of its industry peers.
Looking at the Return On Equity, with a value of 33.49%, MRK belongs to the top of the industry, outperforming 95.85% of the companies in the same industry.
MRK has a better Return On Invested Capital (20.61%) than 95.85% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for MRK is significantly above the industry average of 15.38%.
The last Return On Invested Capital (20.61%) for MRK is above the 3 year average (20.39%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 13.96% | ||
| ROE | 33.49% | ||
| ROIC | 20.61% |
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 (25.79%) than 95.34% of its industry peers.
MRK's Profit Margin has been stable in the last couple of years.
MRK has a Operating Margin of 37.52%. This is amongst the best in the industry. MRK outperforms 96.37% of its industry peers.
In the last couple of years the Operating Margin of MRK has grown nicely.
The Gross Margin of MRK (78.32%) is better than 85.49% of its industry peers.
MRK's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 37.52% | ||
| PM (TTM) | 25.79% | ||
| GM | 78.32% |
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.
MRK has about the same amout of shares outstanding than it did 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
MRK has an Altman-Z score of 4.05. This indicates that MRK is financially healthy and has little risk of bankruptcy at the moment.
With a decent Altman-Z score value of 4.05, MRK is doing good in the industry, outperforming 76.68% of the companies in the same industry.
MRK has a debt to FCF ratio of 2.40. This is a good value and a sign of high solvency as MRK would need 2.40 years to pay back of all of its debts.
Looking at the Debt to FCF ratio, with a value of 2.40, MRK belongs to the top of the industry, outperforming 91.19% of the companies in the same industry.
A Debt/Equity ratio of 0.69 indicates that MRK is somewhat dependend on debt financing.
The Debt to Equity ratio of MRK (0.69) is worse than 66.84% 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 | 2.4 | ||
| Altman-Z | 4.05 |
ROIC/WACC2.16
WACC9.56%
2.3 Liquidity
MRK has a Current Ratio of 1.42. This is a normal value and indicates that MRK is financially healthy and should not expect problems in meeting its short term obligations.
MRK's Current ratio of 1.42 is on the low side compared to the rest of the industry. MRK is outperformed by 68.91% of its industry peers.
A Quick Ratio of 1.17 indicates that MRK should not have too much problems paying its short term obligations.
With a Quick ratio value of 1.17, MRK is not doing good in the industry: 68.91% of the companies in the same industry are doing better.
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 | 1.42 | ||
| Quick Ratio | 1.17 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an nice 18.28% over the past year.
The Earnings Per Share has been growing by 8.04% on average over the past years. This is quite good.
Looking at the last year, MRK shows a small growth in Revenue. The Revenue has grown by 1.82% in the last 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)18.28%
EPS 3Y6.87%
EPS 5Y8.04%
EPS Q2Q%-3.95%
Revenue 1Y (TTM)1.82%
Revenue growth 3Y9.63%
Revenue growth 5Y10.4%
Sales Q2Q%-1.9%
3.2 Future
MRK is expected to show a small growth in Earnings Per Share. In the coming years, the EPS will grow by 5.37% yearly.
The Revenue is expected to grow by 1.86% on average over the next years.
EPS Next Y17.86%
EPS Next 2Y12.72%
EPS Next 3Y12.19%
EPS Next 5Y5.37%
Revenue Next Year1.17%
Revenue Next 2Y3.05%
Revenue Next 3Y3.98%
Revenue Next 5Y1.86%
3.3 Evolution
The EPS growth rate is decreasing: in the next years the growth will be less than in the last years.
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.
4. Valuation
4.1 Price/Earnings Ratio
MRK is valuated reasonably with a Price/Earnings ratio of 11.09.
Based on the Price/Earnings ratio, MRK is valued cheaply inside the industry as 90.16% of the companies are valued more expensively.
When comparing the Price/Earnings ratio of MRK to the average of the S&P500 Index (27.24), we can say MRK is valued rather cheaply.
MRK is valuated reasonably with a Price/Forward Earnings ratio of 8.79.
Compared to the rest of the industry, the Price/Forward Earnings ratio of MRK indicates a rather cheap valuation: MRK is cheaper than 88.08% of the companies listed in the same industry.
MRK is valuated cheaply when we compare the Price/Forward Earnings ratio to 22.81, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 11.09 | ||
| Fwd PE | 8.79 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, MRK is valued cheaply inside the industry as 89.64% of the companies are valued more expensively.
86.01% 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 | 14.49 | ||
| EV/EBITDA | 8.58 |
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.
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 12.19% in the coming years.
PEG (NY)0.62
PEG (5Y)1.38
EPS Next 2Y12.72%
EPS Next 3Y12.19%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 3.76%, MRK has a reasonable but not impressive dividend return.
Compared to an average industry Dividend Yield of 3.83, MRK pays a better dividend. On top of this MRK pays more dividend than 94.82% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.34, MRK pays a better dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.76% |
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 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 48.95% of its income as dividend. This is a bit on the high side, but may be sustainable.
The dividend of MRK is growing, but the earnings are growing slower. This means the dividend growth is not sustainable.
DP48.95%
EPS Next 2Y12.72%
EPS Next 3Y12.19%
NYSE:MRK (8/25/2025, 3:47:07 PM)
85.3754
-1.99 (-2.28%)
Chartmill FA Rating
GICS SectorHealth Care
GICS IndustryGroupPharmaceuticals, Biotechnology & Life Sciences
GICS IndustryPharmaceuticals
Earnings (Last)
Earnings (Next)
Inst Owners80.5%
Inst Owner Change0.26%
Ins Owners0.05%
Ins Owner Change0.38%
Market Cap213.25B
Analysts76.25
Price Target101.44 (18.82%)
Short Float %1.03%
Short Ratio1.8
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.76% |
Yearly Dividend3.1
Dividend Growth(5Y)6.9%
DP48.95%
Div Incr Years14
Div Non Decr Years34
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)5.31%
Min EPS beat(2)2.93%
Max EPS beat(2)7.69%
EPS beat(4)4
Avg EPS beat(4)4.85%
Min EPS beat(4)2.93%
Max EPS beat(4)7.69%
EPS beat(8)8
Avg EPS beat(8)21.1%
EPS beat(12)12
Avg EPS beat(12)15.97%
EPS beat(16)16
Avg EPS beat(16)15.3%
Revenue beat(2)1
Avg Revenue beat(2)-0.54%
Min Revenue beat(2)-1.54%
Max Revenue beat(2)0.45%
Revenue beat(4)2
Avg Revenue beat(4)-0.25%
Min Revenue beat(4)-1.54%
Max Revenue beat(4)0.45%
Revenue beat(8)5
Avg Revenue beat(8)0.7%
Revenue beat(12)9
Avg Revenue beat(12)1.51%
Revenue beat(16)13
Avg Revenue beat(16)2.28%
PT rev (1m)-1.66%
PT rev (3m)-6.08%
EPS NQ rev (1m)-3.17%
EPS NQ rev (3m)-4.19%
EPS NY rev (1m)0.42%
EPS NY rev (3m)0.11%
Revenue NQ rev (1m)-0.43%
Revenue NQ rev (3m)-0.68%
Revenue NY rev (1m)-0.33%
Revenue NY rev (3m)-0.5%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 11.09 | ||
| Fwd PE | 8.79 | ||
| P/S | 3.35 | ||
| P/FCF | 14.49 | ||
| P/OCF | 11.51 | ||
| P/B | 4.35 | ||
| P/tB | 17.47 | ||
| EV/EBITDA | 8.58 |
EPS(TTM)7.7
EY9.02%
EPS(NY)9.71
Fwd EY11.37%
FCF(TTM)5.89
FCFY6.9%
OCF(TTM)7.42
OCFY8.69%
SpS25.47
BVpS19.61
TBVpS4.89
PEG (NY)0.62
PEG (5Y)1.38
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 13.96% | ||
| ROE | 33.49% | ||
| ROCE | 26.09% | ||
| ROIC | 20.61% | ||
| ROICexc | 22.76% | ||
| ROICexgc | 40.92% | ||
| OM | 37.52% | ||
| PM (TTM) | 25.79% | ||
| GM | 78.32% | ||
| FCFM | 23.14% |
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%
ROICexcg growth 3Y7.57%
ROICexcg 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-Score7
Asset Turnover0.54
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.69 | ||
| Debt/FCF | 2.4 | ||
| Debt/EBITDA | 1.19 | ||
| Cap/Depr | 82.85% | ||
| Cap/Sales | 5.99% | ||
| Interest Coverage | 17.88 | ||
| Cash Conversion | 65.1% | ||
| Profit Quality | 89.74% | ||
| Current Ratio | 1.42 | ||
| Quick Ratio | 1.17 | ||
| Altman-Z | 4.05 |
F-Score7
WACC9.56%
ROIC/WACC2.16
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)18.28%
EPS 3Y6.87%
EPS 5Y8.04%
EPS Q2Q%-3.95%
EPS Next Y17.86%
EPS Next 2Y12.72%
EPS Next 3Y12.19%
EPS Next 5Y5.37%
Revenue 1Y (TTM)1.82%
Revenue growth 3Y9.63%
Revenue growth 5Y10.4%
Sales Q2Q%-1.9%
Revenue Next Year1.17%
Revenue Next 2Y3.05%
Revenue Next 3Y3.98%
Revenue Next 5Y1.86%
EBIT growth 1Y1.85%
EBIT growth 3Y15.93%
EBIT growth 5Y19.23%
EBIT Next Year29.85%
EBIT Next 3Y14.96%
EBIT Next 5Y9.07%
FCF growth 1Y35.96%
FCF growth 3Y23.27%
FCF growth 5Y12.67%
OCF growth 1Y22.95%
OCF growth 3Y15.02%
OCF growth 5Y9.82%