Attractive P/E Ratio
Reasonable Price-to-Sales Ratio
Strong Profit Margins
High Return on Equity
Strong Liquidity Ratios
Manageable Debt Levels
🌍 Global Reach and Impact
💪 Strong Product Portfolio
🔍 Innovation-Driven Pipeline
🚀 Strong Growth Expectations
🔬 Robust R&D Investments
High Price-to-Book Ratio
Low Interest Coverage
📉 GARDASIL Challenges in China
🔄 Uncertainty in GARDASIL Outlook
Overall, Merck showcases a strong business model with solid competitive advantages, particularly in oncology and a diversified pipeline. However, challenges in specific markets like China and uncertainty in future sales targets for GARDASIL highlight areas of concern. The company is well-positioned for future growth, driven by innovation and a commitment to research.
Analysis Date: February 4, 2025
Last Updated: March 12, 2025
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
Benjamin Graham's value investing approach focuses on finding stocks with a significant margin of safety between their intrinsic value and market price.
Intrinsic Value
Estimated fair value based on Graham's formula
$84.20
Current Market Price: $80.99
IV/P Ratio: 1.04x (>1.0 indicates undervalued)
Margin of Safety
Gap between intrinsic value and market price
4.0%
Graham recommended a minimum of 20-30% margin of safety
Higher values indicate a greater potential discount to fair value
Graham Criteria Checklist
Benjamin Graham's value investing checklist for MRK
Positive earnings (5+ years)
Dividend history (5+ years)
P/E ratio ≤ 20 (12.09)
P/B ratio ≤ 1.5 (4.47)
Current ratio ≥ 2.0 (1.36x)
Long-term debt < Net current assets (3.33x)
Margin of safety (4.0%)
MRK does not meet all Graham criteria
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
MRK exhibits a gross profit margin of 80.85%, an operating profit margin of 35.36%, and a net profit margin of 26.68%, highlighting its effectiveness in converting sales into profits.
A return on equity (ROE) of 39.18% indicates that MRK is highly effective in generating profit from its equity base, which is significantly above average.
Profitability metrics measure a company's ability to generate earnings relative to its revenue, operating costs, and other relevant metrics. Higher values generally indicate better performance.
Return on Equity (ROE)
Measures how efficiently a company uses its equity to generate profits
39.18%
Higher values indicate better returns for shareholders
TTM (as of 2025-04-16)
Return on Assets (ROA)
Measures how efficiently a company uses its assets to generate profits
3.20%
Higher values indicate better asset utilization
TTM (as of 2025-04-16)
Gross Profit Margin
Percentage of revenue retained after accounting for cost of goods sold
80.85%
Higher values indicate better efficiency in production
TTM (as of 2025-04-16)
Net Profit Margin
Percentage of revenue retained after accounting for all expenses
26.68%
Higher values indicate better overall profitability
TTM (as of 2025-04-16)
MRK has a current ratio of 1.36 and a quick ratio of 1.15, indicating good short-term financial health and the ability to cover its liabilities.
The debt-to-equity ratio of 0.80 and debt-to-assets ratio of 0.32 suggest that MRK maintains a balanced approach to leveraging, which helps reduce financial risk.
An interest coverage ratio of 0.0 indicates that MRK currently does not have enough earnings to cover its interest obligations, which could pose a risk if interest rates rise.
Financial health metrics assess a company's ability to meet its financial obligations and its overall financial stability.
Debt to Equity Ratio
Total debt divided by total equity
0.80x
Lower values indicate less financial leverage and risk
Less than 1.0 is conservative, 1.0-2.0 is moderate, >2.0 indicates high risk
Q4 2024
Current Ratio
Current assets divided by current liabilities
1.36x
Higher values indicate better short-term liquidity
Less than 1.0 is concerning, 1.0-2.0 is adequate, greater than 2.0 is good
Q4 2024
Merck has demonstrated a significant global presence, reaching nearly half a billion people with its medicines and vaccines in 2024. This extensive reach underscores its ability to impact patient care on a large scale.
The company has a robust portfolio, particularly in oncology with KEYTRUDA, which saw a 21% sales growth due to its demand across various cancer types. This reflects Merck's competitive advantage in the oncology space.
Merck is advancing multiple late-phase programs, with 20 potential new growth drivers identified, most of which have blockbuster potential. This focus on innovation enhances its long-term business quality.
Merck faced challenges with GARDASIL's sales in China, leading to a decision to pause shipments to manage inventory. This reflects a vulnerability in its international strategy.
Despite short-term headwinds, Merck expects strong growth in the second half of 2025 and beyond, supported by a diverse pipeline and new product launches, particularly in oncology and animal health.
Merck has significantly increased investments in its R&D pipeline, which is pivotal for sustaining long-term growth and innovation potential. The company is focused on various therapeutic areas, including cardiometabolic and infectious diseases.
The withdrawal of the $11 billion target for GARDASIL sales indicates a cautious approach towards future revenue expectations in this segment, particularly in the volatile Chinese market.