Merck & Co., Inc.
Merck & Co., Inc. Fundamental Analysis
Merck & Co., Inc. (MRK) shows strong financial fundamentals with a PE ratio of 16.68, profit margin of 28.08%, and ROE of 36.31%. The company generates $65.2B in annual revenue with moderate year-over-year growth of 6.74%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 68.1/100 based on profitability, valuation, growth, and balance sheet metrics. The C+ grade reflects average fundamentals, with notable risks in certain areas.
Fundamental Health Score
We analyze MRK's fundamental strength across five key dimensions:
Efficiency Score
WeakMRK struggles to generate sufficient returns from assets.
Valuation Score
ExcellentMRK trades at attractive valuation levels.
Growth Score
ExcellentMRK delivers strong and consistent growth momentum.
Financial Health Score
ModerateMRK shows balanced financial health with some risks.
Profitability Score
ExcellentMRK achieves industry-leading margins.
Key Financial Metrics
Is MRK Expensive or Cheap?
P/E Ratio
MRK trades at 16.68 times earnings. This indicates a fair valuation.
PEG Ratio
When adjusting for growth, MRK's PEG of -4.37 indicates potential undervaluation.
Price to Book
The market values Merck & Co., Inc. at 5.87 times its book value. This suggests the stock is fully valued or overvalued on an asset basis.
EV/EBITDA
Enterprise value stands at 11.24 times EBITDA. This signals the market has high growth expectations.
How Well Does MRK Make Money?
Net Profit Margin
For every $100 in sales, Merck & Co., Inc. keeps $28.08 as profit after all expenses.
Operating Margin
Core operations generate 41.19 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $36.31 in profit for every $100 of shareholder equity.
ROA
Merck & Co., Inc. generates $0.00 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
Merck & Co., Inc. produces operating cash flow of $13.66B, showing steady but balanced cash generation.
Free Cash Flow
Merck & Co., Inc. generates strong free cash flow of $10.57B, providing ample flexibility for dividends, buybacks, or growth.
FCF Per Share
Each share generates $4.23 in free cash annually.
FCF Yield
MRK converts 3.44% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
16.68
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
-4.37
vs 25 benchmark
P/B Ratio
Price to book value ratio
5.87
vs 25 benchmark
P/S Ratio
Price to sales ratio
4.70
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
0.00
vs 25 benchmark
Current Ratio
Current assets to current liabilities
0.00
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
0.36
vs 25 benchmark
ROA
Return on assets percentage
0.00
vs 25 benchmark
ROCE
Return on capital employed
0.00
vs 25 benchmark
How MRK Stacks Against Its Sector Peers
| Metric | MRK Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 16.68 | 29.43 | Better (Cheaper) |
| ROE | 36.31% | 800.00% | Weak |
| Net Margin | 28.08% | -20145.00% (disorted) | Strong |
| Debt/Equity | 0.00 | 0.30 | Strong (Low Leverage) |
| Current Ratio | 0.00 | 4.64 | Weak Liquidity |
| ROA | 0.00% | -17936.00% (disorted) | Weak |
MRK outperforms its industry in 3 out of 6 key metrics, particularly excelling in Net Margin, but lagging in ROE.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews Merck & Co., Inc.'s 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
66.16%
Industry Style: Defensive, Growth, Innovation
High GrowthEPS CAGR
76.17%
Industry Style: Defensive, Growth, Innovation
High GrowthFCF CAGR
61.81%
Industry Style: Defensive, Growth, Innovation
High Growth