MERCK & CO. INC. (MRK) Stock Fundamental Analysis
NYSE:MRK - New York Stock Exchange, Inc. - US58933Y1055 - Common Stock - Currency: USD
MRK gets a fundamental rating of 7 out of 10. The analysis compared the fundamentals against 193 industry peers in the Pharmaceuticals industry. MRK has outstanding health and profitabily ratings, belonging to the best of the industry. This is a solid base for any company. MRK may be a bit undervalued, certainly considering the very reasonable score on growth MRK also has an excellent dividend rating. This makes MRK very considerable 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.
In the past 5 years MRK has always 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 15.14%, MRK belongs to the top of the industry, outperforming 96.89% of the companies in the same industry.
The Return On Equity of MRK (36.07%) is better than 96.89% of its industry peers.
With an excellent Return On Invested Capital value of 20.84%, MRK belongs to the best of the industry, outperforming 95.85% 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 14.92%.
The last Return On Invested Capital (20.84%) for MRK is above the 3 year average (20.39%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 15.14% | ||
| ROE | 36.07% | ||
| ROIC | 20.84% |
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
The Profit Margin of MRK (27.27%) is better than 96.89% of its industry peers.
MRK's Profit Margin has been stable in the last couple of years.
MRK's Operating Margin of 37.12% is amongst the best of the industry. MRK outperforms 96.89% of its industry peers.
In the last couple of years the Operating Margin of MRK has grown nicely.
Looking at the Gross Margin, with a value of 77.07%, MRK belongs to the top of the industry, outperforming 86.01% of the companies in the same industry.
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 | 37.12% | ||
| PM (TTM) | 27.27% | ||
| GM | 77.07% |
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.
The number of shares outstanding for MRK remains at a similar level compared to 1 year ago.
MRK has less shares outstanding than it did 5 years ago.
The debt/assets ratio for MRK has been reduced compared to a year ago.
2.2 Solvency
An Altman-Z score of 3.95 indicates that MRK is not in any danger for bankruptcy at the moment.
MRK has a Altman-Z score of 3.95. This is in the better half of the industry: MRK outperforms 76.17% of its industry peers.
MRK has a debt to FCF ratio of 2.04. This is a good value and a sign of high solvency as MRK would need 2.04 years to pay back of all of its debts.
Looking at the Debt to FCF ratio, with a value of 2.04, MRK belongs to the top of the industry, outperforming 93.78% of the companies in the same industry.
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 66.84% of its industry peers.
Even though the debt/equity ratio score it not favorable for MRK, it has very limited outstanding debt, so we won't put too much weight on the DE evaluation.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.69 | ||
| Debt/FCF | 2.04 | ||
| Altman-Z | 3.95 |
ROIC/WACC2.33
WACC8.95%
2.3 Liquidity
A Current Ratio of 1.41 indicates that MRK should not have too much problems paying its short term obligations.
MRK has a worse Current ratio (1.41) than 69.95% of its industry peers.
MRK has a Quick Ratio of 1.16. This is a normal value and indicates that MRK is financially healthy and should not expect problems in meeting its short term obligations.
The Quick ratio of MRK (1.16) is worse than 69.95% 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 |
3. Growth
3.1 Past
MRK shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 18.28%, which is quite good.
Measured over the past years, MRK shows a quite strong growth in Earnings Per Share. The EPS has been growing by 8.04% on average per year.
MRK shows a small growth in Revenue. In the last year, the Revenue has grown by 1.82%.
The Revenue has been growing by 10.40% on average over the past years. This is quite good.
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
Based on estimates for the next years, MRK will show a small growth in Earnings Per Share. The EPS will grow by 5.96% on average per year.
The Revenue is expected to grow by 2.20% on average over the next years.
EPS Next Y17.37%
EPS Next 2Y13.89%
EPS Next 3Y12.94%
EPS Next 5Y5.96%
Revenue Next Year1.52%
Revenue Next 2Y3.58%
Revenue Next 3Y4.21%
Revenue Next 5Y2.2%
3.3 Evolution
The EPS growth rate is decreasing: in the next years the growth will be less 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 10.40, which indicates a very decent valuation of MRK.
MRK's Price/Earnings ratio is rather cheap when compared to the industry. MRK is cheaper than 90.16% of the companies in the same industry.
MRK is valuated cheaply when we compare the Price/Earnings ratio to 27.24, which is the current average of the S&P500 Index.
A Price/Forward Earnings ratio of 8.08 indicates a reasonable valuation of MRK.
Compared to the rest of the industry, the Price/Forward Earnings ratio of MRK indicates a rather cheap valuation: MRK is cheaper than 87.56% of the companies listed in the same industry.
Compared to an average S&P500 Price/Forward Earnings ratio of 36.42, MRK is valued rather cheaply.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 10.4 | ||
| Fwd PE | 8.08 |
4.2 Price Multiples
88.08% of the companies in the same industry are more expensive than MRK, based on the Enterprise Value to EBITDA ratio.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of MRK indicates a rather cheap valuation: MRK is cheaper than 89.64% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 11.8 | ||
| EV/EBITDA | 7.96 |
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 12.94% in the coming years.
PEG (NY)0.6
PEG (5Y)1.29
EPS Next 2Y13.89%
EPS Next 3Y12.94%
5. Dividend
5.1 Amount
MRK has a Yearly Dividend Yield of 4.09%, which is a nice return.
Compared to an average industry Dividend Yield of 4.20, 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 2.40, MRK pays a better dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 4.09% |
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
45.54% 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 slower than its dividend. This means the dividend growth is not sustainable.
DP45.54%
EPS Next 2Y13.89%
EPS Next 3Y12.94%
NYSE:MRK (8/5/2025, 9:42:09 AM)
80.075
+0.22 (+0.27%)
Chartmill FA Rating
GICS SectorHealth Care
GICS IndustryGroupPharmaceuticals, Biotechnology & Life Sciences
GICS IndustryPharmaceuticals
Earnings (Last)
Earnings (Next)
Inst Owners80.57%
Inst Owner Change-0.43%
Ins Owners0.05%
Ins Owner Change0.65%
Market Cap201.07B
Analysts76.25
Price Target103.15 (28.82%)
Short Float %1.15%
Short Ratio1.95
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 4.09% |
Yearly Dividend3.1
Dividend Growth(5Y)6.9%
DP45.54%
Div Incr Years14
Div Non Decr Years34
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)4.19%
Min EPS beat(2)2.93%
Max EPS beat(2)5.44%
EPS beat(4)4
Avg EPS beat(4)4.13%
Min EPS beat(4)2.93%
Max EPS beat(4)5.44%
EPS beat(8)8
Avg EPS beat(8)20.93%
EPS beat(12)12
Avg EPS beat(12)16.06%
EPS beat(16)15
Avg EPS beat(16)14.76%
Revenue beat(2)1
Avg Revenue beat(2)0.18%
Min Revenue beat(2)-0.1%
Max Revenue beat(2)0.45%
Revenue beat(4)3
Avg Revenue beat(4)0.32%
Min Revenue beat(4)-0.1%
Max Revenue beat(4)0.71%
Revenue beat(8)6
Avg Revenue beat(8)1.27%
Revenue beat(12)10
Avg Revenue beat(12)1.96%
Revenue beat(16)14
Avg Revenue beat(16)2.49%
PT rev (1m)-1.6%
PT rev (3m)-8.27%
EPS NQ rev (1m)-0.82%
EPS NQ rev (3m)-1.12%
EPS NY rev (1m)-0.28%
EPS NY rev (3m)-1.03%
Revenue NQ rev (1m)-0.26%
Revenue NQ rev (3m)-0.02%
Revenue NY rev (1m)-0.15%
Revenue NY rev (3m)-0.04%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 10.4 | ||
| Fwd PE | 8.08 | ||
| P/S | 3.15 | ||
| P/FCF | 11.8 | ||
| P/OCF | 9.63 | ||
| P/B | 4.16 | ||
| P/tB | 18.46 | ||
| EV/EBITDA | 7.96 |
EPS(TTM)7.7
EY9.62%
EPS(NY)9.91
Fwd EY12.38%
FCF(TTM)6.79
FCFY8.47%
OCF(TTM)8.31
OCFY10.38%
SpS25.46
BVpS19.25
TBVpS4.34
PEG (NY)0.6
PEG (5Y)1.29
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 15.14% | ||
| ROE | 36.07% | ||
| ROCE | 26.38% | ||
| ROIC | 20.84% | ||
| ROICexc | 23.22% | ||
| ROICexgc | 43.31% | ||
| OM | 37.12% | ||
| PM (TTM) | 27.27% | ||
| GM | 77.07% | ||
| FCFM | 26.66% |
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-Score8
Asset Turnover0.56
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.69 | ||
| Debt/FCF | 2.04 | ||
| Debt/EBITDA | 1.18 | ||
| Cap/Depr | 83.2% | ||
| Cap/Sales | 6.01% | ||
| Interest Coverage | 18.03 | ||
| Cash Conversion | 73.66% | ||
| Profit Quality | 97.73% | ||
| Current Ratio | 1.41 | ||
| Quick Ratio | 1.16 | ||
| Altman-Z | 3.95 |
F-Score8
WACC8.95%
ROIC/WACC2.33
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 Y17.37%
EPS Next 2Y13.89%
EPS Next 3Y12.94%
EPS Next 5Y5.96%
Revenue 1Y (TTM)1.82%
Revenue growth 3Y9.63%
Revenue growth 5Y10.4%
Sales Q2Q%-1.9%
Revenue Next Year1.52%
Revenue Next 2Y3.58%
Revenue Next 3Y4.21%
Revenue Next 5Y2.2%
EBIT growth 1Y5.54%
EBIT growth 3Y15.93%
EBIT growth 5Y19.23%
EBIT Next Year30.08%
EBIT Next 3Y15.02%
EBIT Next 5Y9.31%
FCF growth 1Y51.3%
FCF growth 3Y23.27%
FCF growth 5Y12.67%
OCF growth 1Y33.21%
OCF growth 3Y15.02%
OCF growth 5Y9.82%