MRK

Merck & Co

Fundamental data last updated:April 13, 2026

company profile

SECTOR

Healthcare

industry

Drug Manufacturers - General

Exchange

NYSE

County of HQ

United States

Next Earnings Date

04/30/26

Business Summary

Merck & Co. is a large-scale pharmaceutical manufacturer that generates cash through patented drug portfolios, leveraging R&D to create high-margin therapies protected by intellectual property. Its 34.70% operating margin reflects pricing power derived from branded medicines and regulatory exclusivity. Cash flow is recycled into research, dividends, and balance sheet support, reinforced by a 20.60% ROIC that signals disciplined capital allocation. The moat is built on patent protection, global distribution scale, and the ability to continuously fund innovation from internally generated capital.

VALUATION

P/E

16.7

Market Cap ($M USD)

$299,892

Forward P/E

12.4

PEG

3.8

PRICE TO SALES

4.7

PRICE TO BOOK

5.7

EV / EBITDA

11.8

5-Year Average P/E

DIVIDEND

Yield

2.70%

Annual Payout

$3.40

Payout Ratio

44.90%

Consecutive Years of Dividend Growth

10+

5-Year Dividend Growth Rate

5.50%

Financial Health & Profitability

Earnings Per Share

$7.30

Next Year EPS Growth Estimate

$9.80

Next Year Revenue Growth Estimate

5.40%

Return on Equity (ROE)

34.70%

Operating Margin

34.00%

Debt-to-Equity

0.9

Piotroski F-Score

4

Altman Z-Score

4

Return on Invested Capital (ROIC)

20.60%%

Current Ratio

1.5

Quick Ratio

Gainseekers Quantitative Analysis

Summary

At 16.7x earnings and just 12.4x forward earnings, MRK screens statistically inexpensive relative to its scale ($299,892M market cap) and profitability profile, particularly with a 20.60% ROIC and 34.70% operating margin. However, the forward PEG of 3.8 signals that projected growth does not justify a premium multiple, and the sharp drop from $11.8 EPS to $7.30 next year explains why the forward multiple compresses. The Altman Z-Score of 4 indicates strong balance sheet safety and low bankruptcy risk, reinforcing financial stability despite a moderate 34.00% debt/equity ratio. This is not a distressed value play; it is a financially secure large-cap trading at a reasonable multiple but facing a growth deceleration that the market is already discounting.

AI Exposure / Tech Reliance

As a Drug Manufacturers - General company, MRK operates in a sector where AI increasingly enhances drug discovery, trial design, and pipeline optimization. The 34.70% operating margin gives it capital flexibility to invest in data-driven R&D without stressing its 1.5 current ratio. Large incumbents in healthcare tend to absorb AI advances rather than be disrupted by them, suggesting resilience rather than existential risk.

The Bull Case

A GARP investor buys MRK for capital efficiency and durability. A 20.60% ROIC against a 5.40% ROE suggests strong invested capital productivity even if equity returns appear temporarily compressed, while a 34.70% operating margin demonstrates pricing power and scale advantages. The Piotroski F-Score of 4 is neutral but not distressed, and an Altman Z-Score of 4 confirms financial stability, reducing downside tail risk. With a forward P/E of 12.4 and a dividend per share of 2.70% supported by a payout ratio of $3.40, investors are being paid to wait while the company monetizes its asset base, and institutional ownership at $131.42 signals strong professional participation.

The Bear Case

The bear thesis centers on deteriorating growth quality. A PEG of 3.8 is expensive relative to expected growth, especially with EPS projected to fall from 11.8 to 7.30 next year and sales growth next year listed at $9.80, implying weak forward momentum. A 5.50% short float is not extreme but meaningful for a mega-cap, suggesting skepticism around sustainability of earnings, while the 34.00% debt/equity adds leverage risk if margins compress. The Piotroski F-Score of 4 is mediocre, not indicative of strong improving fundamentals, and the 0.9 TTM yield is modest relative to the risk of earnings normalization.

Market Sentiment & Smart Money

Short Interest %

1.30%

Analyst Consensus

1.71

Average Analyst Price Target

$131.42

Institutional Ownership %

81.30%

1-Year Beta

0.52

Insider Buying % (6 Mo)

0.10%%

Distance to 52-Week High

97.00%%

Distance to 52-Week Low

165.60%%