Merck & Co Inc

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MRK : NYSE : Health Care
$58.82 | %
Today's Range: 58.55 - 59.08
Avg. Daily Volume: 8,871,100
07/22/16 - 4:00 PM ET

Financial Analysis


MERCK & CO's gross profit margin for the first quarter of its fiscal year 2016 is essentially unchanged when compared to the same period a year ago. Even though sales decreased, the net income has increased, representing an increase to the bottom line. MERCK & CO has average liquidity. Currently, the Quick Ratio is 1.13 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 8.28% 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 Q1 FY16 Q1 FY15
Net Sales ($mil)9312.09425.0
EBITDA ($mil)3718.03573.0
EBIT ($mil)2157.01983.0
Net Income ($mil)1125.0953.0


Balance Sheet Q1 FY16 Q1 FY15
Cash & Equiv. ($mil)12943.015601.0
Total Assets ($mil)98755.0108345.0
Total Debt ($mil)25769.030234.0
Equity ($mil)43806.047765.0


Profitability Q1 FY16 Q1 FY15
Gross Profit Margin81.6280.46
EBITDA Margin39.9237.9
Operating Margin23.1621.04
Sales Turnover0.40.38
Return on Assets4.6710.3
Return on Equity10.5323.38
Debt Q1 FY16 Q1 FY15
Current Ratio1.641.61
Debt/Capital0.370.39
Interest Expense172.0164.0
Interest Coverage12.5412.09


Share Data Q1 FY16 Q1 FY15
Shares outstanding (mil)2769.552828.39
Div / share0.460.45
EPS0.40.33
Book value / share15.8216.89
Institutional Own % n/a n/a
Avg Daily Volume8907009.01.0582382E7

Valuation


BUY. MERCK & CO's P/E ratio indicates a discount compared to an average of 45.53 for the Pharmaceuticals industry and a significant premium compared to the S&P 500 average of 25.03. Conducting a second comparison, its price-to-book ratio of 3.77 indicates a premium versus the S&P 500 average of 2.80 and a significant discount versus the industry average of 8.16. The price-to-sales ratio is well above the S&P 500 average, but well below the industry average. Upon assessment of these and other key valuation criteria, MERCK & CO proves to trade at a discount to investment alternatives within the industry.


Price/Earnings
1 2 3 4 5
premium   discount
  Price/Cash Flow
1 2 3 4 5
premium   discount
MRK 36.60 Peers 45.53   MRK 13.44 Peers 29.24

Discount. A lower P/E ratio than its peers can signify a less expensive stock or lower growth expectations.

MRK is trading at a discount 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 15.76 Peers 16.57   MRK 0.26 Peers 0.57

Average. An average price-to-projected earnings ratio can signify an industry neutral stock price and average future growth expectations.

MRK is trading at a valuation on par with 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 3.77 Peers 8.16   MRK -57.78 Peers -19.18

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 4.19 Peers 21.27   MRK -4.87 Peers 5.64

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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