NYSE:MRK

Stock Analysis Report

Executive Summary

Merck & Co., Inc. provides healthcare solutions worldwide.

Rewards

Trading at 29.1% below its fair value

Earnings are forecast to grow 8.98% per year

Earnings grew by 178.3% over the past year

Pays a high and reliable dividend of 2.71%

Risk Analysis

Has a high level of debt



Snowflake Analysis

Solid track record established dividend payer.


Similar Companies

Share Price & News

How has Merck's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: MRK has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

-2.1%

MRK

-0.2%

US Pharmaceuticals

0.6%

US Market


1 Year Return

18.8%

MRK

13.6%

US Pharmaceuticals

24.6%

US Market

Return vs Industry: MRK exceeded the US Pharmaceuticals industry which returned 12.6% over the past year.

Return vs Market: MRK underperformed the US Market which returned 24.7% over the past year.


Shareholder returns

MRKIndustryMarket
7 Day-2.1%-0.2%0.6%
30 Day-2.3%2.4%3.0%
90 Day8.6%15.9%10.6%
1 Year22.1%18.8%16.4%13.6%27.3%24.6%
3 Year60.2%46.8%42.2%32.1%50.5%40.8%
5 Year69.8%45.9%30.7%16.9%78.9%59.1%

Price Volatility Vs. Market

How volatile is Merck's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Merck undervalued compared to its fair value and its price relative to the market?

29.4%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: MRK ($89.93) is trading below our estimate of fair value ($126.92)

Significantly Below Fair Value: MRK is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: MRK is poor value based on its PE Ratio (25.4x) compared to the Pharmaceuticals industry average (24.9x).

PE vs Market: MRK is poor value based on its PE Ratio (24.9x) compared to the US market (18.9x).


Price to Earnings Growth Ratio

PEG Ratio: MRK is poor value based on its PEG Ratio (2.8x)


Price to Book Ratio

PB vs Industry: MRK is overvalued based on its PB Ratio (8.5x) compared to the US Pharmaceuticals industry average (3.3x).


Next Steps

Future Growth

How is Merck forecast to perform in the next 1 to 3 years based on estimates from 16 analysts?

9.0%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: MRK's forecast earnings growth (9% per year) is above the savings rate (1.7%).

Earnings vs Market: MRK's earnings (9% per year) are forecast to grow slower than the US market (14.3% per year).

High Growth Earnings: MRK's earnings are forecast to grow, but not significantly.

Revenue vs Market: MRK's revenue (3.7% per year) is forecast to grow slower than the US market (7.5% per year).

High Growth Revenue: MRK's revenue (3.7% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: MRK's Return on Equity is forecast to be very high in 3 years time (51.5%).


Next Steps

Past Performance

How has Merck performed over the past 5 years?

-10.0%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: MRK has high quality earnings.

Growing Profit Margin: MRK's current net profit margins (20.3%) are higher than last year (8%).


Past Earnings Growth Analysis

Earnings Trend: MRK's earnings have declined by -10% per year over the past 5 years.

Accelerating Growth: MRK's earnings growth over the past year (178.3%) exceeds its 5-year average (-10% per year).

Earnings vs Industry: MRK earnings growth over the past year (178.3%) exceeded the Pharmaceuticals industry 36.8%.


Return on Equity

High ROE: MRK's Return on Equity (34.1%) is considered high.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Merck's financial position?


Financial Position Analysis

Short Term Liabilities: MRK's short term assets ($26.1B) exceed its short term liabilities ($20.7B).

Long Term Liabilities: MRK's short term assets ($26.1B) do not cover its long term liabilities ($35.7B).


Debt to Equity History and Analysis

Debt Level: MRK's debt to equity ratio (96.9%) is considered high.

Reducing Debt: MRK's debt to equity ratio has increased from 61.2% to 96.9% over the past 5 years.

Debt Coverage: MRK's debt is well covered by operating cash flow (46.9%).

Interest Coverage: MRK's interest payments on its debt are well covered by EBIT (25.7x coverage).


Balance Sheet

Inventory Level: MRK has a high level of physical assets or inventory.

Debt Coverage by Assets: MRK's debt is covered by short term assets (assets are 1x debt).


Next Steps

Dividend

What is Merck's current dividend yield, its reliability and sustainability?

2.72%

Current Dividend Yield


Dividend Yield vs Market

company2.7%marketbottom25%1.4%markettop25%3.7%industryaverage2.6%forecastin3Years2.9%

Current dividend yield vs market & industry

Notable Dividend: MRK's dividend (2.71%) is higher than the bottom 25% of dividend payers in the US market (1.4%).

High Dividend: MRK's dividend (2.71%) is low compared to the top 25% of dividend payers in the US market (3.66%).


Stability and Growth of Payments

Stable Dividend: MRK's dividends per share have been stable in the past 10 years.

Growing Dividend: MRK's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonable payout ratio (59.1%), MRK's dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: MRK's dividends in 3 years are forecast to be well covered by earnings (39.8% payout ratio).


Next Steps

Management

What is the CEO of Merck's salary, the management and board of directors tenure and is there insider trading?

5.3yrs

Average management tenure


CEO

Ken Frazier (64yo)

9yrs

Tenure

US$20,934,504

Compensation

Mr. Kenneth C. Frazier, also known as Ken, has been the President of Merck & Co., Inc. since May 01, 2010 and has also been its Chief Executive Officer since January 1, 2011. He also serves as the Chief Ex ...


CEO Compensation Analysis

Compensation vs Market: Ken's total compensation ($USD20.93M) is above average for companies of similar size in the US market ($USD10.76M).

Compensation vs Earnings: Ken's compensation has been consistent with company performance over the past year.


Management Age and Tenure

5.3yrs

Average Tenure

54yo

Average Age

Experienced Management: MRK's management team is seasoned and experienced (5.3 years average tenure).


Board Age and Tenure

12.2yrs

Average Tenure

65.5yo

Average Age

Experienced Board: MRK's board of directors are seasoned and experienced ( 12.2 years average tenure).


Insider Trading

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Management Team

  • Ken Frazier (64yo)

    Chairman

    • Tenure: 9yrs
    • Compensation: US$20.93m
  • Roger Perlmutter (67yo)

    Executive VP & President of Merck Research Laboratories

    • Tenure: 6.8yrs
    • Compensation: US$7.10m
  • Adele Ambrose (62yo)

    Chief Communications Officer and Senior Vice President

    • Tenure: 10.2yrs
  • Steve Mizell (59yo)

    Executive Vice President of Human Resources

    • Tenure: 3.1yrs
  • Rob Davis (52yo)

    Executive VP of Global Services & CFO

    • Tenure: 5.8yrs
    • Compensation: US$6.62m
  • Peter Dannenbaum

    Vice President of Investor Relations

    • Tenure: 0.4yrs
  • Adam Schechter (54yo)

    Special Advisor

    • Tenure: 9.7yrs
    • Compensation: US$6.51m
  • Mike Nally (43yo)

    Chief Marketing Officer & Executive VP

    • Tenure: 1yrs
  • Ashley Watson (50yo)

    Senior VP and Chief Ethics & Compliance Officer

    • Tenure: 4.8yrs
  • Jennifer Zachary (41yo)

    Executive VP & General Counsel

    • Tenure: 1.8yrs
    • Compensation: US$5.19m

Board Members

  • Peter Wendell (68yo)

    Independent Director

    • Tenure: 16.3yrs
    • Compensation: US$360.00k
  • Pam Craig (62yo)

    Independent Director

    • Tenure: 4.3yrs
    • Compensation: US$355.00k
  • Wendell Weeks (59yo)

    Independent Director

    • Tenure: 15.9yrs
    • Compensation: US$360.00k
  • Pat Russo (67yo)

    Independent Director

    • Tenure: 24.3yrs
    • Compensation: US$330.00k
  • Ken Frazier (64yo)

    Chairman

    • Tenure: 9yrs
    • Compensation: US$20.93m
  • Tom Glocer (60yo)

    Independent Director

    • Tenure: 12.2yrs
    • Compensation: US$320.00k
  • Shelly Lazarus (71yo)

    Independent Director

    • Tenure: 15.3yrs
    • Compensation: US$360.00k
  • Les Brun (67yo)

    Lead Independent Director

    • Compensation: US$360.00k
  • Tom Cech (72yo)

    Independent Director

    • Tenure: 10.7yrs
    • Compensation: US$347.78k
  • Paul Rothman (61yo)

    Independent Director

    • Tenure: 4.3yrs
    • Compensation: US$355.00k

Company Information

Merck & Co., Inc.'s company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Merck & Co., Inc.
  • Ticker: MRK
  • Exchange: NYSE
  • Founded: 1891
  • Industry: Pharmaceuticals
  • Sector: Pharmaceuticals & Biotech
  • Market Cap: US$228.247b
  • Shares outstanding: 2.55b
  • Website: https://www.merck.com

Number of Employees


Location

  • Merck & Co., Inc.
  • 2000 Galloping Hill Road
  • Kenilworth
  • New Jersey
  • 7033
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
0QAHLSE (London Stock Exchange)YesCommon StockGBUSDJan 1968
MRKNYSE (New York Stock Exchange)YesCommon StockUSUSDJan 1968
MRK *BMV (Bolsa Mexicana de Valores)YesCommon StockMXMXNJan 1968
MRKENXTPA (Euronext Paris)YesCommon StockFREURJan 1968
6MKDB (Deutsche Boerse AG)YesCommon StockDEEURJan 1968
MRKSWX (SIX Swiss Exchange)YesCommon StockCHCHFJan 1968
MRK-UETLX (Eurotlx)YesCommon StockITEURJan 1968
6MKXTRA (XETRA Trading Platform)YesCommon StockDEEURJan 1968
MRKSNSE (Santiago Stock Exchange)YesCommon StockCLUSDJan 1968
MRKWBAG (Wiener Boerse AG)YesCommon StockATEURJan 1968
MRKBASE (Buenos Aires Stock Exchange)CEDEAR (5 REP 1 USD0.50)ARARSMar 2000
MRCK34BOVESPA (Bolsa de Valores de Sao Paulo)BDR EACH REPR 1 COM SHBRBRLDec 2011

Biography

Merck & Co., Inc. provides healthcare solutions worldwide. The company offers therapeutic and preventive agents to treat cardiovascular, type 2 diabetes, chronic hepatitis C virus, HIV-1 infection, intra-abdominal, fungal infection, insomnia, and inflammatory diseases; neuromuscular blocking agents; cholesterol modifying medicines; and anti-bacterial and vaginal contraceptive products. It also offers products to prevent chemotherapy-induced and post-operative nausea and vomiting; treat non-small-cell lung, ovarian and breast, thyroid, cervical, and brain cancers; and prevent diseases caused by human papillomavirus, as well as offers vaccines for measles, mumps, rubella, varicella, shingles, rotavirus gastroenteritis, and pneumococcal diseases. In addition, the company provides antibiotic and anti-inflammatory drugs to treat infectious and respiratory diseases, fertility disorders, and pneumonia in cattle, bovine, and swine; vaccines for poultry; parasiticide for sea lice in salmon; and antibiotics and vaccines for fish. Further, it offers companion animal products, such as ointments; diabetes mellitus treatment and anthelmintic products; products to treat fleas and ticks in dogs and cats; horse fertility management products; dog, cat, and horse vaccines; and products for protection against bites from fleas, ticks, mosquitoes, and sandflies. It has collaborations with AstraZeneca PLC; Bayer AG; Eisai Co., Ltd.; Intec Pharma Ltd.; Nerviano Medical Sciences; Healthy Interactions, Inc.; Oncologie, Inc.; Themis Bioscience; I-MAB Biopharma Co., Ltd.; 4D pharma plc; Promega Corporation; Seattle Genetics, Inc.; Astellas Pharma, Inc.; Seven and Eight BioPharmaceuticals Inc.; and InxMed (Shanghai) Co., Ltd. It serves drug wholesalers and retailers, hospitals, government agencies and entities, physicians, distributors, veterinarians, animal producers, and managed health care providers. The company was founded in 1891 and is headquartered in Kenilworth, New Jersey. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/01/22 23:43
End of Day Share Price2020/01/22 00:00
Earnings2019/09/30
Annual Earnings2018/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.