Merck & Co Inc

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MRK : NYSE : Health Care
$62.34 | %
Today's Range: 62.1 - 62.68
Avg. Daily Volume: 1.12256E7
01/13/17 - 4:00 PM ET

Financial Analysis


MERCK & CO's gross profit margin for the third quarter of its fiscal year 2016 is essentially unchanged when compared to the same period a year ago. The company has grown sales and net income during the past quarter when compared with the same quarter a year ago, however, it was unable to keep up with the growth of the average competitor within its industry. MERCK & CO has average liquidity. Currently, the Quick Ratio is 1.31 which shows that technically this company has the ability to cover short-term cash needs. The company's liquidity has decreased from the same period last year, indicating deteriorating cash flow.

During the same period, stockholders' equity ("net worth") has remained virtually unchanged only decreasing by 4.04% from the same quarter last year. Together, the key liquidity measurements indicate that it is relatively unlikely that the company will face financial difficulties in the near future.

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Income Statement Q3 FY16 Q3 FY15
Net Sales ($mil)10536.010073.0
EBITDA ($mil)4347.03953.0
EBIT ($mil)3172.02414.0
Net Income ($mil)2185.01826.0


Balance Sheet Q3 FY16 Q3 FY15
Cash & Equiv. ($mil)13067.012089.0
Total Assets ($mil)98335.0101232.0
Total Debt ($mil)25143.026667.0
Equity ($mil)43744.045587.0


Profitability Q3 FY16 Q3 FY15
Gross Profit Margin79.1478.77
EBITDA Margin41.2539.24
Operating Margin30.1123.97
Sales Turnover0.410.39
Return on Assets5.5810.64
Return on Equity12.5523.64
Debt Q3 FY16 Q3 FY15
Current Ratio1.891.62
Debt/Capital0.370.37
Interest Expense170.0165.0
Interest Coverage18.6614.63


Share Data Q3 FY16 Q3 FY15
Shares outstanding (mil)2761.662802.24
Div / share0.460.45
EPS0.780.64
Book value / share15.8416.27
Institutional Own % n/a n/a
Avg Daily Volume1.1197976E71.0138564E7

Valuation


BUY. MERCK & CO's P/E ratio indicates a premium compared to an average of 27.12 for the Pharmaceuticals industry and a premium compared to the S&P 500 average of 25.49. Conducting a second comparison, its price-to-book ratio of 3.93 indicates a premium versus the S&P 500 average of 2.84 and a significant discount versus the industry average of 65.26. The price-to-sales ratio is well above the S&P 500 average, but well below the industry average.


Price/Earnings
1 2 3 4 5
premium   discount
  Price/Cash Flow
1 2 3 4 5
premium   discount
MRK 31.74 Peers 27.12   MRK 15.59 Peers 18.93

Premium. A higher P/E ratio than its peers can signify a more expensive stock or higher growth expectations.

MRK is trading at a premium to its peers.

 

Discount. The P/CF ratio, a stock’s price divided by the company's cash flow from operations, is useful for comparing companies with different capital requirements or financing structures.

MRK is trading at a discount to its peers.

 
Price/Projected
Earnings
1 2 3 4 5
premium   discount
  Price to
Earnings/Growth
1 2 3 4 5
premium   discount
MRK 16.03 Peers 14.42   MRK 0.22 Peers 0.50

Premium. A higher price-to-projected earnings ratio than its peers can signify a more expensive stock or higher future growth expectations.

MRK is trading at a premium to its peers.

 

Discount. The PEG ratio is the stock’s P/E divided by the consensus estimate of long-term earnings growth. Faster growth can justify higher price multiples.

MRK trades at a significant discount to its peers.

 
Price/Book
1 2 3 4 5
premium   discount
  Earnings Growth
1 2 3 4 5
lower   higher
MRK 3.93 Peers 65.26   MRK -47.74 Peers -14.61

Discount. A lower price-to-book ratio makes a stock more attractive to investors seeking stocks with lower market values per dollar of equity on the balance sheet.

MRK is trading at a significant discount to its peers.

 

Lower. Elevated earnings growth rates can lead to capital appreciation and justify higher price-to-earnings ratios.

However, MRK is expected to significantly trail its peers on the basis of its earnings growth rate.

 
Price/Sales
1 2 3 4 5
premium   discount
  Sales Growth
1 2 3 4 5
premium   discount
MRK 4.31 Peers 12.47   MRK 0.35 Peers 5.05

Discount. In the absence of P/E and P/B multiples, the price-to-sales ratio can display the value investors are placing on each dollar of sales.

MRK is trading at a significant discount to its industry on this measurement.

 

Lower. A sales growth rate that trails the industry implies that a company is losing market share.

MRK significantly trails its peers on the basis of sales growth

 

 

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