Merck & Co Inc

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MRK : NYSE : Health Care
$61.92 -1.40 | -2.20%
Today's Range: 61.56 - 63.02
Avg. Daily Volume: 9,599,300
09/29/16 - 3:59 PM ET

Financial Analysis


MERCK & CO's gross profit margin for the second quarter of its fiscal year 2016 is essentially unchanged when compared to the same period a year ago. The company has grown its sales and net income during the past quarter when compared with the same quarter a year ago, and although its growth in net income has outpaced the industry average, its revenue growth has not. MERCK & CO has average liquidity. Currently, the Quick Ratio is 1.26 which shows that technically this company has the ability to cover short-term cash needs. The company's liquidity has increased from the same period last year.

During the same period, stockholders' equity ("net worth") has decreased by 6.65% 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 Q2 FY16 Q2 FY15
Net Sales ($mil)9844.09785.0
EBITDA ($mil)3741.03689.0
EBIT ($mil)2191.02128.0
Net Income ($mil)1205.0686.0


Balance Sheet Q2 FY16 Q2 FY15
Cash & Equiv. ($mil)11834.011370.0
Total Assets ($mil)96475.0102582.0
Total Debt ($mil)24286.026552.0
Equity ($mil)43357.046448.0


Profitability Q2 FY16 Q2 FY15
Gross Profit Margin81.0379.15
EBITDA Margin38.037.7
Operating Margin22.2621.75
Sales Turnover0.410.39
Return on Assets5.329.6
Return on Equity11.8321.2
Debt Q2 FY16 Q2 FY15
Current Ratio1.871.62
Debt/Capital0.360.36
Interest Expense171.0174.0
Interest Coverage12.8112.23


Share Data Q2 FY16 Q2 FY15
Shares outstanding (mil)2765.632823.96
Div / share0.460.45
EPS0.430.24
Book value / share15.6816.45
Institutional Own % n/a n/a
Avg Daily Volume9884408.08650859.0

Valuation


BUY. MERCK & CO's P/E ratio indicates a premium compared to an average of 29.47 for the Pharmaceuticals industry and a premium compared to the S&P 500 average of 25.19. Conducting a second comparison, its price-to-book ratio of 4.02 indicates a premium versus the S&P 500 average of 2.82 and a significant discount versus the industry average of 19.66. 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 34.63 Peers 29.47   MRK 15.35 Peers 20.98

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 significant 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 16.41 Peers 15.05   MRK 0.25 Peers 0.54

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 4.02 Peers 19.66   MRK -46.79 Peers -20.56

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 4.42 Peers 12.73   MRK -2.01 Peers 5.56

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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