MERCK & CO. INC. (MRK)
US58933Y1055 - Common Stock
Overall MRK gets a fundamental rating of 7 out of 10. We evaluated MRK against 196 industry peers in the Pharmaceuticals industry. MRK has an excellent profitability rating, but 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. MRK also has an excellent dividend rating. This makes MRK very considerable 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.
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
The Return On Assets of MRK (12.20%) is better than 94.85% of its industry peers.
The Return On Equity of MRK (31.52%) is better than 94.85% of its industry peers.
With an excellent Return On Invested Capital value of 16.35%, MRK belongs to the best of the industry, outperforming 93.30% of the companies in the same industry.
Measured over the past 3 years, the Average Return On Invested Capital for MRK is significantly below the industry average of 41.65%.
The last Return On Invested Capital (16.35%) for MRK is above the 3 year average (12.63%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 12.2% | ||
| ROE | 31.52% | ||
| ROIC | 16.35% |
ROA(3y)8.66%
ROA(5y)9.07%
ROE(3y)22.24%
ROE(5y)26.52%
ROIC(3y)12.63%
ROIC(5y)12.83%
1.3 Margins
MRK has a Profit Margin of 21.98%. This is amongst the best in the industry. MRK outperforms 93.30% of its industry peers.
In the last couple of years the Profit Margin of MRK has declined.
The Operating Margin of MRK (28.68%) is better than 93.81% of its industry peers.
In the last couple of years the Operating Margin of MRK has declined.
MRK's Gross Margin of 75.79% is amongst the best of the industry. MRK outperforms 83.51% of its industry peers.
MRK's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 28.68% | ||
| PM (TTM) | 21.98% | ||
| GM | 75.79% |
OM growth 3Y-36.42%
OM growth 5Y-24.03%
PM growth 3Y-67.08%
PM growth 5Y-47.14%
GM growth 3Y0.65%
GM growth 5Y1.25%
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 less 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 a worse debt to assets ratio.
2.2 Solvency
An Altman-Z score of 4.37 indicates that MRK is not in any danger for bankruptcy at the moment.
MRK's Altman-Z score of 4.37 is fine compared to the rest of the industry. MRK outperforms 76.80% of its industry peers.
The Debt to FCF ratio of MRK is 2.87, which is a good value as it means it would take MRK, 2.87 years of fcf income to pay off all of its debts.
Looking at the Debt to FCF ratio, with a value of 2.87, MRK belongs to the top of the industry, outperforming 91.75% of the companies in the same industry.
A Debt/Equity ratio of 0.80 indicates that MRK is somewhat dependend on debt financing.
MRK has a Debt to Equity ratio of 0.80. This is in the lower half of the industry: MRK underperforms 70.10% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.8 | ||
| Debt/FCF | 2.87 | ||
| Altman-Z | 4.37 |
ROIC/WACC1.89
WACC8.66%
2.3 Liquidity
A Current Ratio of 1.47 indicates that MRK should not have too much problems paying its short term obligations.
MRK has a worse Current ratio (1.47) than 75.26% of its industry peers.
A Quick Ratio of 1.22 indicates that MRK should not have too much problems paying its short term obligations.
MRK has a Quick ratio of 1.22. This is in the lower half of the industry: MRK underperforms 76.29% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.47 | ||
| Quick Ratio | 1.22 |
3. Growth
3.1 Past
MRK shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 131.67%, which is quite impressive.
Measured over the past years, MRK shows a very negative growth in Earnings Per Share. The EPS has been decreasing by -19.14% on average per year.
Looking at the last year, MRK shows a small growth in Revenue. The Revenue has grown by 7.15% in the last year.
Measured over the past years, MRK shows a small growth in Revenue. The Revenue has been growing by 7.29% on average per year.
EPS 1Y (TTM)131.67%
EPS 3Y-36.76%
EPS 5Y-19.14%
EPS Q2Q%210.68%
Revenue 1Y (TTM)7.15%
Revenue growth 3Y13.13%
Revenue growth 5Y7.29%
Sales Q2Q%7.16%
3.2 Future
MRK is expected to show a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 53.11% yearly.
The Revenue is expected to grow by 5.82% on average over the next years.
EPS Next Y443.01%
EPS Next 2Y155.92%
EPS Next 3Y93.31%
EPS Next 5Y53.11%
Revenue Next Year6.88%
Revenue Next 2Y6.73%
Revenue Next 3Y6.51%
Revenue Next 5Y5.82%
3.3 Evolution
The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
The Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
The Price/Earnings ratio is 16.85, which indicates a correct 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 87.63% of the companies listed in the same industry.
When comparing the Price/Earnings ratio of MRK to the average of the S&P500 Index (31.73), we can say MRK is valued slightly cheaper.
MRK is valuated reasonably with a Price/Forward Earnings ratio of 11.17.
MRK's Price/Forward Earnings ratio is rather cheap when compared to the industry. MRK is cheaper than 86.60% of the companies in the same industry.
MRK is valuated cheaply when we compare the Price/Forward Earnings ratio to 22.71, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 16.85 | ||
| Fwd PE | 11.17 |
4.2 Price Multiples
MRK's Enterprise Value to EBITDA ratio is rather cheap when compared to the industry. MRK is cheaper than 81.44% of the companies in the same industry.
Based on the Price/Free Cash Flow ratio, MRK is valued cheaply inside the industry as 84.54% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 21.15 | ||
| EV/EBITDA | 13.83 |
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.
MRK has an outstanding profitability rating, which may justify a higher PE ratio.
MRK's earnings are expected to grow with 93.31% in the coming years. This may justify a more expensive valuation.
PEG (NY)0.04
PEG (5Y)N/A
EPS Next 2Y155.92%
EPS Next 3Y93.31%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 2.82%, MRK has a reasonable but not impressive dividend return.
Compared to an average industry Dividend Yield of 3.84, MRK pays a better dividend. On top of this MRK pays more dividend than 92.78% of the companies listed in the same industry.
MRK's Dividend Yield is a higher than the S&P500 average which is at 2.22.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.82% |
5.2 History
On average, the dividend of MRK grows each year by 8.47%, which is quite nice.
MRK has paid a dividend for at least 10 years, which is a reliable track record.
MRK has not decreased their dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)8.47%
Div Incr Years13
Div Non Decr Years33
5.3 Sustainability
55.64% 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 more than its dividend. This makes the dividend growth sustainable.
DP55.64%
EPS Next 2Y155.92%
EPS Next 3Y93.31%
MERCK & CO. INC.
NYSE:MRK (10/14/2024, 8:04:00 PM)
After market: 109.69 0 (0%)109.69
-0.04 (-0.04%)
Chartmill FA Rating
GICS SectorHealth Care
GICS IndustryGroupPharmaceuticals, Biotechnology & Life Sciences
GICS IndustryPharmaceuticals
Earnings (Last)
Earnings (Next)
Inst Owners
Inst Owner Change
Ins Owners
Ins Owner Change
Market Cap278.04B
Analysts
Price Target
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.82% |
Dividend Growth(5Y)
DP
Div Incr Years
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Surprises & Revisions
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Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 16.85 | ||
| Fwd PE | 11.17 | ||
| P/S | |||
| P/FCF | |||
| P/OCF | |||
| P/B | |||
| P/tB | |||
| EV/EBITDA |
EPS(TTM)
EY
EPS(NY)
Fwd EY
FCF(TTM)
FCFY
OCF(TTM)
OCFY
SpS
BVpS
TBVpS
PEG (NY)0.04
PEG (5Y)N/A
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 12.2% | ||
| ROE | 31.52% | ||
| ROCE | |||
| ROIC | |||
| ROICexc | |||
| ROICexgc | |||
| OM | 28.68% | ||
| PM (TTM) | 21.98% | ||
| GM | 75.79% | ||
| FCFM |
ROA(3y)
ROA(5y)
ROE(3y)
ROE(5y)
ROIC(3y)
ROIC(5y)
ROICexc(3y)
ROICexc(5y)
ROICexgc(3y)
ROICexgc(5y)
ROCE(3y)
ROCE(5y)
ROICexcg growth 3Y
ROICexcg growth 5Y
ROICexc growth 3Y
ROICexc growth 5Y
OM growth 3Y
OM growth 5Y
PM growth 3Y
PM growth 5Y
GM growth 3Y
GM growth 5Y
F-Score
Asset Turnover0.55
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.8 | ||
| Debt/FCF | |||
| Debt/EBITDA | |||
| Cap/Depr | |||
| Cap/Sales | |||
| Interest Coverage | |||
| Cash Conversion | |||
| Profit Quality | |||
| Current Ratio | 1.47 | ||
| Quick Ratio | 1.22 | ||
| Altman-Z |
F-Score
WACC
ROIC/WACC
Cap/Depr(3y)
Cap/Depr(5y)
Cap/Sales(3y)
Cap/Sales(5y)
Profit Quality(3y)
Profit Quality(5y)
High Growth Momentum
Growth
EPS 1Y (TTM)131.67%
EPS 3Y-36.76%
EPS 5Y
EPS Q2Q%
EPS Next Y443.01%
EPS Next 2Y
EPS Next 3Y
EPS Next 5Y
Revenue 1Y (TTM)7.15%
Revenue growth 3Y13.13%
Revenue growth 5Y
Sales Q2Q%
Revenue Next Year
Revenue Next 2Y
Revenue Next 3Y
Revenue Next 5Y
EBIT growth 1Y
EBIT growth 3Y
EBIT growth 5Y
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EBIT Next 5Y
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