MERCK & CO. INC. (MRK) Stock Fundamental Analysis
USA • New York Stock Exchange • NYSE:MRK • US58933Y1055
110.27 USD
+1.93 (+1.78%)
At close: Jan 30, 2026
110.2 USD
-0.07 (-0.06%)
After Hours: 1/30/2026, 8:07:17 PM
We assign a fundamental rating of 7 out of 10 to MRK. MRK was compared to 191 industry peers in the Pharmaceuticals industry. While MRK has a great profitability rating, there are some minor concerns on its financial health. A decent growth rate in combination with a cheap valuation! Better keep an eye on MRK. Finally MRK also has an excellent dividend rating. These ratings would make MRK suitable for value and dividend investing!
1. Profitability
1.1 Basic Checks
- MRK had positive earnings in the past year.
- MRK had a positive operating cash flow in the past year.
- Each year in the past 5 years MRK has been profitable.
- In the past 5 years MRK always reported a positive cash flow from operatings.
1.2 Ratios
- Looking at the Return On Assets, with a value of 14.69%, MRK belongs to the top of the industry, outperforming 94.76% of the companies in the same industry.
- MRK has a Return On Equity of 36.71%. This is amongst the best in the industry. MRK outperforms 95.81% of its industry peers.
- MRK has a better Return On Invested Capital (19.15%) than 96.34% 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 12.82%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 14.69% | ||
| ROE | 36.71% | ||
| ROIC | 19.15% |
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's Profit Margin of 29.63% is amongst the best of the industry. MRK outperforms 94.24% of its industry peers.
- In the last couple of years the Profit Margin of MRK has remained more or less at the same level.
- The Operating Margin of MRK (38.08%) is better than 96.34% of its industry peers.
- MRK's Operating Margin has improved in the last couple of years.
- MRK's Gross Margin of 78.72% is amongst the best of the industry. MRK outperforms 83.77% of its industry peers.
- In the last couple of years the Gross Margin of MRK has remained more or less at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 38.08% | ||
| PM (TTM) | 29.63% | ||
| GM | 78.72% |
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
- 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.
- The number of shares outstanding for MRK has been reduced compared to 5 years ago.
- Compared to 1 year ago, MRK has an improved debt to assets ratio.
2.2 Solvency
- An Altman-Z score of 4.19 indicates that MRK is not in any danger for bankruptcy at the moment.
- MRK has a Altman-Z score of 4.19. This is in the better half of the industry: MRK outperforms 70.68% of its industry peers.
- The Debt to FCF ratio of MRK is 3.17, which is a good value as it means it would take MRK, 3.17 years of fcf income to pay off all of its debts.
- With an excellent Debt to FCF ratio value of 3.17, MRK belongs to the best of the industry, outperforming 88.48% of the companies in the same industry.
- MRK has a Debt/Equity ratio of 0.77. This is a neutral value indicating MRK is somewhat dependend on debt financing.
- MRK's Debt to Equity ratio of 0.77 is on the low side compared to the rest of the industry. MRK is outperformed by 70.16% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.77 | ||
| Debt/FCF | 3.17 | ||
| Altman-Z | 4.19 |
ROIC/WACC2.08
WACC9.21%
2.3 Liquidity
- MRK has a Current Ratio of 1.66. 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 1.66, MRK is doing worse than 68.06% of the companies in the same industry.
- MRK has a Quick Ratio of 1.44. 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 Quick ratio, with a value of 1.44, MRK is doing worse than 64.40% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.66 | ||
| Quick Ratio | 1.44 |
3. Growth
3.1 Past
- The Earnings Per Share has grown by an impressive 48.07% over the past year.
- MRK shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 8.04% yearly.
- The Revenue has been growing slightly by 1.68% in the past year.
- MRK shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 10.40% yearly.
EPS 1Y (TTM)48.07%
EPS 3Y6.87%
EPS 5Y8.04%
EPS Q2Q%70.7%
Revenue 1Y (TTM)1.68%
Revenue growth 3Y9.63%
Revenue growth 5Y10.4%
Sales Q2Q%3.72%
3.2 Future
- MRK is expected to show a small growth in Earnings Per Share. In the coming years, the EPS will grow by 6.65% yearly.
- MRK is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 2.64% yearly.
EPS Next Y18.51%
EPS Next 2Y-13.49%
EPS Next 3Y10.11%
EPS Next 5Y6.65%
Revenue Next Year1.23%
Revenue Next 2Y2.83%
Revenue Next 3Y3.72%
Revenue Next 5Y2.64%
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 stable.
- 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
- With a Price/Earnings ratio of 12.52, MRK is valued correctly.
- MRK's Price/Earnings ratio is rather cheap when compared to the industry. MRK is cheaper than 87.96% of the companies in the same industry.
- MRK is valuated cheaply when we compare the Price/Earnings ratio to 28.32, which is the current average of the S&P500 Index.
- The Price/Forward Earnings ratio is 19.28, which indicates a rather expensive current valuation of MRK.
- Based on the Price/Forward Earnings ratio, MRK is valued a bit cheaper than the industry average as 78.53% of the companies are valued more expensively.
- MRK's Price/Forward Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 25.57.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 12.52 | ||
| Fwd PE | 19.28 |
4.2 Price Multiples
- Based on the Enterprise Value to EBITDA ratio, MRK is valued cheaper than 89.53% of the companies in the same industry.
- Based on the Price/Free Cash Flow ratio, MRK is valued cheaply inside the industry as 84.82% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 20.97 | ||
| EV/EBITDA | 10.23 |
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.
PEG (NY)0.68
PEG (5Y)1.56
EPS Next 2Y-13.49%
EPS Next 3Y10.11%
5. Dividend
5.1 Amount
- MRK has a Yearly Dividend Yield of 3.14%. Purely for dividend investing, there may be better candidates out there.
- MRK's Dividend Yield is rather good when compared to the industry average which is at 0.62. MRK pays more dividend than 94.24% of the companies in the same industry.
- MRK's Dividend Yield is rather good when compared to the S&P500 average which is at 1.83.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.14% |
5.2 History
- The dividend of MRK is nicely growing with an annual growth rate of 6.90%!
- MRK has paid a dividend for at least 10 years, which is 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 Years14
Div Non Decr Years34
5.3 Sustainability
- 42.60% of the earnings are spent on dividend by MRK. 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.
DP42.6%
EPS Next 2Y-13.49%
EPS Next 3Y10.11%
MERCK & CO. INC. / MRK FAQ
What is the fundamental rating for MRK stock?
ChartMill assigns a fundamental rating of 7 / 10 to MRK.
Can you provide the valuation status for MERCK & CO. INC.?
ChartMill assigns a valuation rating of 7 / 10 to MERCK & CO. INC. (MRK). This can be considered as Undervalued.
Can you provide the profitability details for MERCK & CO. INC.?
MERCK & CO. INC. (MRK) has a profitability rating of 9 / 10.
What is the financial health of MERCK & CO. INC. (MRK) stock?
The financial health rating of MERCK & CO. INC. (MRK) is 6 / 10.
How sustainable is the dividend of MERCK & CO. INC. (MRK) stock?
The dividend rating of MERCK & CO. INC. (MRK) is 7 / 10 and the dividend payout ratio is 42.6%.