MERCK & CO. INC. (MRK)
US58933Y1055 - Common Stock
Overall MRK gets a fundamental rating of 6 out of 10. We evaluated MRK against 198 industry peers in the Pharmaceuticals industry. While MRK belongs to the best of the industry regarding profitability, there are some minor concerns on its financial health. MRK scores decently on growth, while it is valued quite cheap. This could make an interesting combination. This makes MRK very considerable for value investing!
1. Profitability
1.1 Basic Checks
In the past year MRK was profitable.
MRK had a positive operating cash flow in the past year.
In the past 5 years MRK has always been profitable.
In the past 5 years MRK always reported a positive cash flow from operatings.
1.2 Ratios
With an excellent Return On Assets value of 0.34%, MRK belongs to the best of the industry, outperforming 83.08% of the companies in the same industry.
MRK has a Return On Equity of 0.97%. This is amongst the best in the industry. MRK outperforms 84.10% of its industry peers.
Looking at the Return On Invested Capital, with a value of 3.97%, MRK belongs to the top of the industry, outperforming 82.05% of the companies in the same industry.
Measured over the past 3 years, the Average Return On Invested Capital for MRK is below the industry average of 16.40%.
The 3 year average ROIC (12.63%) for MRK is well above the current ROIC(3.97%). The reason for the recent decline needs to be investigated.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 0.34% | ||
| ROE | 0.97% | ||
| ROIC | 3.97% |
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's Profit Margin of 0.61% is amongst the best of the industry. MRK outperforms 83.08% of its industry peers.
In the last couple of years the Profit Margin of MRK has declined.
MRK has a better Operating Margin (6.76%) than 80.00% of its industry peers.
In the last couple of years the Operating Margin of MRK has declined.
MRK has a Gross Margin of 73.53%. This is in the better half of the industry: MRK outperforms 79.49% of its industry peers.
MRK's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 6.76% | ||
| PM (TTM) | 0.61% | ||
| GM | 73.53% |
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
With a Return on Invested Capital (ROIC) just above the Cost of Capital (WACC), MRK is creating some value.
MRK has less shares outstanding than it did 1 year ago.
Compared to 5 years ago, MRK has less shares outstanding
The debt/assets ratio for MRK is higher compared to a year ago.
2.2 Solvency
An Altman-Z score of 4.31 indicates that MRK is not in any danger for bankruptcy at the moment.
With a decent Altman-Z score value of 4.31, MRK is doing good in the industry, outperforming 80.00% of the companies in the same industry.
The Debt to FCF ratio of MRK is 3.83, which is a good value as it means it would take MRK, 3.83 years of fcf income to pay off all of its debts.
MRK has a Debt to FCF ratio of 3.83. This is amongst the best in the industry. MRK outperforms 88.72% of its industry peers.
MRK has a Debt/Equity ratio of 0.90. This is a neutral value indicating MRK is somewhat dependend on debt financing.
With a Debt to Equity ratio value of 0.90, MRK is not doing good in the industry: 71.28% of the companies in the same industry are doing better.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.9 | ||
| Debt/FCF | 3.83 | ||
| Altman-Z | 4.31 |
ROIC/WACC0.46
WACC8.66%
2.3 Liquidity
MRK has a Current Ratio of 1.25. 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 1.25, MRK is doing worse than 82.05% of the companies in the same industry.
MRK has a Quick Ratio of 1.00. This is a normal value and indicates that MRK is financially healthy and should not expect problems in meeting its short term obligations.
MRK has a Quick ratio of 1.00. This is in the lower half of the industry: MRK underperforms 79.49% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.25 | ||
| Quick Ratio | 1 |
3. Growth
3.1 Past
The earnings per share for MRK have decreased strongly by -79.95% in the last year.
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.
The Revenue has been growing slightly by 1.40% in the past year.
The Revenue has been growing slightly by 7.29% on average over the past years.
EPS 1Y (TTM)-79.95%
EPS 3Y-36.76%
EPS 5Y-19.14%
EPS growth Q2Q-98.15%
Revenue 1Y (TTM)1.4%
Revenue growth 3Y13.13%
Revenue growth 5Y7.29%
Revenue growth Q2Q5.78%
3.2 Future
MRK is expected to show a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 50.72% yearly.
Based on estimates for the next years, MRK will show a small growth in Revenue. The Revenue will grow by 4.46% on average per year.
EPS Next Y477.4%
EPS Next 2Y156.56%
EPS Next 3Y93.6%
EPS Next 5Y50.72%
Revenue Next Year6.42%
Revenue Next 2Y6.44%
Revenue Next 3Y6.17%
Revenue Next 5Y4.46%
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 accelerating.
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
Based on the Price/Earnings ratio of 85.87, the valuation of MRK can be described as expensive.
Based on the Price/Earnings ratio, MRK is valued a bit cheaper than the industry average as 80.00% of the companies are valued more expensively.
MRK's Price/Earnings ratio indicates a rather expensive valuation when compared to the S&P500 average which is at 24.67.
The Price/Forward Earnings ratio is 14.87, which indicates a correct valuation of MRK.
Based on the Price/Forward Earnings ratio, MRK is valued cheaper than 85.64% of the companies in the same industry.
MRK's Price/Forward Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 21.02.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 85.87 | ||
| Fwd PE | 14.87 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, MRK is valued a bit cheaper than 76.41% of the companies in the same industry.
MRK's Price/Free Cash Flow ratio is rather cheap when compared to the industry. MRK is cheaper than 80.51% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 35.68 | ||
| EV/EBITDA | 44.73 |
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 a very decent profitability rating, which may justify a higher PE ratio.
A more expensive valuation may be justified as MRK's earnings are expected to grow with 93.60% in the coming years.
PEG (NY)0.18
PEG (5Y)N/A
EPS Next 2Y156.56%
EPS Next 3Y93.6%
5. Dividend
5.1 Amount
MRK has a Yearly Dividend Yield of 2.37%. 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 4.39. MRK pays more dividend than 92.31% of the companies in the same industry.
MRK's Dividend Yield is comparable with the S&P500 average which is at 2.40.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.37% |
5.2 History
The dividend of MRK is nicely growing with an annual growth rate of 8.47%!
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)8.47%
Div Incr Years13
Div Non Decr Years19
5.3 Sustainability
MRK pays out 2039.73% of its income as dividend. This is not a sustainable payout ratio.
The dividend of MRK is growing, but earnings are growing more, so the dividend growth is sustainable.
DP2039.73%
EPS Next 2Y156.56%
EPS Next 3Y93.6%
MERCK & CO. INC.
NYSE:MRK (5/1/2024, 4:16:25 PM)
After market: 128.5 -0.3 (-0.23%)128.8
-0.42 (-0.33%)
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 Cap326.25B
Analysts
Price Target
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.37% |
Dividend Growth(5Y)
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Surprises & Revisions
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Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 85.87 | ||
| Fwd PE | 14.87 | ||
| 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)0.18
PEG (5Y)N/A
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 0.34% | ||
| ROE | 0.97% | ||
| ROCE | |||
| ROIC | |||
| ROICexc | |||
| ROICexgc | |||
| OM | 6.76% | ||
| PM (TTM) | 0.61% | ||
| GM | 73.53% | ||
| FCFM |
ROA(3y)
ROA(5y)
ROE(3y)
ROE(5y)
ROIC(3y)
ROIC(5y)
ROICexc(3y)
ROICexc(5y)
ROICexgc(3y)
ROICexgc(5y)
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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 Turnover0.56
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.9 | ||
| Debt/FCF | |||
| Debt/EBITDA | |||
| Cap/Depr | |||
| Cap/Sales | |||
| Interest Coverage | |||
| Cash Conversion | |||
| Profit Quality | |||
| Current Ratio | 1.25 | ||
| Quick Ratio | 1 | ||
| 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)
Growth
EPS 1Y (TTM)-79.95%
EPS 3Y-36.76%
EPS 5Y
EPS growth Q2Q
EPS Next Y477.4%
EPS Next 2Y
EPS Next 3Y
EPS Next 5Y
Revenue 1Y (TTM)1.4%
Revenue growth 3Y13.13%
Revenue growth 5Y
Revenue growth Q2Q
Revenue Next Year
Revenue Next 2Y
Revenue Next 3Y
Revenue Next 5Y
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EBIT growth 3Y
EBIT growth 5Y
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