MERCK & CO. INC. (MRK) Stock Fundamental Analysis
USA - NYSE:MRK - US58933Y1055 - Common Stock
86.75 USD
+0.47 (+0.54%)
86.75 USD
0 (0%)
MRK gets a fundamental rating of 7 out of 10. The analysis compared the fundamentals against 191 industry peers in the Pharmaceuticals industry. MRK gets an excellent profitability rating and is at the same time showing great financial health properties. 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 and quality 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.
Each year in the past 5 years MRK has been profitable.
Each year in the past 5 years MRK had a positive operating cash flow.
1.2 Ratios
Looking at the Return On Assets, with a value of 13.96%, MRK belongs to the top of the industry, outperforming 94.76% of the companies in the same industry.
The Return On Equity of MRK (33.49%) is better than 95.81% of its industry peers.
Looking at the Return On Invested Capital, with a value of 20.04%, MRK belongs to the top of the industry, outperforming 96.34% of the companies in the same industry.
The Average Return On Invested Capital over the past 3 years for MRK is significantly above the industry average of 15.25%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 13.96% | ||
| ROE | 33.49% | ||
| ROIC | 20.04% |
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 Profit Margin of 25.79%. This is amongst the best in the industry. MRK outperforms 94.76% of its industry peers.
MRK's Profit Margin has been stable in the last couple of years.
The Operating Margin of MRK (36.48%) is better than 96.34% of its industry peers.
In the last couple of years the Operating Margin of MRK has grown nicely.
The Gross Margin of MRK (77.31%) is better than 83.25% of its industry peers.
MRK's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 36.48% | ||
| PM (TTM) | 25.79% | ||
| GM | 77.31% |
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
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.
Compared to 5 years ago, MRK has less shares outstanding
The debt/assets ratio for MRK has been reduced compared to a year ago.
2.2 Solvency
MRK has an Altman-Z score of 4.01. This indicates that MRK is financially healthy and has little risk of bankruptcy at the moment.
MRK has a Altman-Z score of 4.01. This is in the better half of the industry: MRK outperforms 74.35% of its industry peers.
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.
The Debt to FCF ratio of MRK (2.40) is better than 91.10% 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 68.06% 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 | 4.01 |
ROIC/WACC2.35
WACC8.53%
2.3 Liquidity
A Current Ratio of 1.42 indicates that MRK should not have too much problems paying its short term obligations.
MRK has a worse Current ratio (1.42) than 71.20% of its industry peers.
A Quick Ratio of 1.17 indicates that MRK should not have too much problems paying its short term obligations.
Looking at the Quick ratio, with a value of 1.17, MRK is doing worse than 71.20% of the companies in the same industry.
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
MRK shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 48.07%, which is quite impressive.
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 5.86% yearly.
Based on estimates for the next years, MRK will show a small growth in Revenue. The Revenue will grow by 2.98% on average per year.
EPS Next Y18.21%
EPS Next 2Y11.65%
EPS Next 3Y11.32%
EPS Next 5Y5.86%
Revenue Next Year1.08%
Revenue Next 2Y3.07%
Revenue Next 3Y3.96%
Revenue Next 5Y2.98%
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
A Price/Earnings ratio of 9.85 indicates a reasonable valuation of MRK.
Compared to the rest of the industry, the Price/Earnings ratio of MRK indicates a rather cheap valuation: MRK is cheaper than 90.58% of the companies listed in the same industry.
The average S&P500 Price/Earnings ratio is at 26.28. MRK is valued rather cheaply when compared to this.
The Price/Forward Earnings ratio is 9.11, which indicates a very decent valuation of MRK.
87.96% of the companies in the same industry are more expensive than MRK, based on the Price/Forward Earnings ratio.
MRK is valuated cheaply when we compare the Price/Forward Earnings ratio to 33.61, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 9.85 | ||
| Fwd PE | 9.11 |
4.2 Price Multiples
MRK's Enterprise Value to EBITDA ratio is rather cheap when compared to the industry. MRK is cheaper than 90.05% of the companies in the same industry.
Based on the Price/Free Cash Flow ratio, MRK is valued cheaply inside the industry as 86.91% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 14.72 | ||
| EV/EBITDA | 8.69 |
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.
PEG (NY)0.54
PEG (5Y)1.22
EPS Next 2Y11.65%
EPS Next 3Y11.32%
5. Dividend
5.1 Amount
MRK has a Yearly Dividend Yield of 3.78%.
Compared to an average industry Dividend Yield of 7.03, MRK pays a better dividend. On top of this MRK pays more dividend than 95.29% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.36, MRK pays a better dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.78% |
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 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
48.95% 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.
DP48.95%
EPS Next 2Y11.65%
EPS Next 3Y11.32%
86.75
+0.47 (+0.54%)
Chartmill FA Rating
GICS SectorHealth Care
GICS IndustryGroupPharmaceuticals, Biotechnology & Life Sciences
GICS IndustryPharmaceuticals
Earnings (Last)
Earnings (Next)
Inst Owners80.53%
Inst Owner Change-0.47%
Ins Owners0.05%
Ins Owner Change-0.3%
Market Cap216.68B
Revenue(TTM)64.23B
Net Income(TTM)16.41B
Analysts75.76
Price Target101.03 (16.46%)
Short Float %1.07%
Short Ratio2.2
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.78% |
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)-0.46%
PT rev (3m)-0.41%
EPS NQ rev (1m)-0.4%
EPS NQ rev (3m)-0.44%
EPS NY rev (1m)0.24%
EPS NY rev (3m)0.71%
Revenue NQ rev (1m)-0.45%
Revenue NQ rev (3m)-0.45%
Revenue NY rev (1m)-0.02%
Revenue NY rev (3m)-0.44%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 9.85 | ||
| Fwd PE | 9.11 | ||
| P/S | 3.41 | ||
| P/FCF | 14.72 | ||
| P/OCF | 11.69 | ||
| P/B | 4.42 | ||
| P/tB | 17.75 | ||
| EV/EBITDA | 8.69 |
EPS(TTM)8.81
EY10.16%
EPS(NY)9.52
Fwd EY10.98%
FCF(TTM)5.89
FCFY6.79%
OCF(TTM)7.42
OCFY8.55%
SpS25.47
BVpS19.61
TBVpS4.89
PEG (NY)0.54
PEG (5Y)1.22
Graham Number62.35
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 13.96% | ||
| ROE | 33.49% | ||
| ROCE | 25.37% | ||
| ROIC | 20.04% | ||
| ROICexc | 22.13% | ||
| ROICexgc | 39.79% | ||
| OM | 36.48% | ||
| PM (TTM) | 25.79% | ||
| GM | 77.31% | ||
| 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%
ROICexgc growth 3Y7.57%
ROICexgc 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 | 1.22 | ||
| Cap/Depr | 82.85% | ||
| Cap/Sales | 5.99% | ||
| Interest Coverage | 17.39 | ||
| Cash Conversion | 66.65% | ||
| Profit Quality | 89.74% | ||
| Current Ratio | 1.42 | ||
| Quick Ratio | 1.17 | ||
| Altman-Z | 4.01 |
F-Score7
WACC8.53%
ROIC/WACC2.35
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)48.07%
EPS 3Y6.87%
EPS 5Y8.04%
EPS Q2Q%70.7%
EPS Next Y18.21%
EPS Next 2Y11.65%
EPS Next 3Y11.32%
EPS Next 5Y5.86%
Revenue 1Y (TTM)1.68%
Revenue growth 3Y9.63%
Revenue growth 5Y10.4%
Sales Q2Q%3.72%
Revenue Next Year1.08%
Revenue Next 2Y3.07%
Revenue Next 3Y3.96%
Revenue Next 5Y2.98%
EBIT growth 1Y-0.96%
EBIT growth 3Y15.93%
EBIT growth 5Y19.23%
EBIT Next Year29.99%
EBIT Next 3Y15.06%
EBIT Next 5Y10.12%
FCF growth 1Y35.96%
FCF growth 3Y23.27%
FCF growth 5Y12.67%
OCF growth 1Y22.95%
OCF growth 3Y15.02%
OCF growth 5Y9.82%
MERCK & CO. INC. / MRK FAQ
What is the fundamental rating for MRK stock?
ChartMill assigns a fundamental rating of 7 / 10 to MRK.
What is the valuation status of MERCK & CO. INC. (MRK) stock?
ChartMill assigns a valuation rating of 9 / 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.
Can you provide the expected EPS growth for MRK stock?
The Earnings per Share (EPS) of MERCK & CO. INC. (MRK) is expected to grow by 18.21% in the next year.
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 48.95%.