Merck & Co Inc

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MRK : NYSE : Health Care
$66.16 | %
Today's Range: 65.84 - 66.389
Avg. Daily Volume: 8929500.0
06/23/17 - 4:00 PM ET

Financial Analysis


MERCK & CO's gross profit margin for the first quarter of its fiscal year 2017 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 1.13 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 decreased by 9.06% 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 FY17 Q1 FY16
Net Sales ($mil)9434.09312.0
EBITDA ($mil)3530.03638.0
EBIT ($mil)2386.02157.0
Net Income ($mil)1551.01125.0


Balance Sheet Q1 FY17 Q1 FY16
Cash & Equiv. ($mil)15249.012943.0
Total Assets ($mil)96561.098755.0
Total Debt ($mil)28474.025769.0
Equity ($mil)39837.043806.0


Profitability Q1 FY17 Q1 FY16
Gross Profit Margin81.6480.76
EBITDA Margin37.4139.06
Operating Margin25.2923.16
Sales Turnover0.410.4
Return on Assets4.54.67
Return on Equity10.910.53
Debt Q1 FY17 Q1 FY16
Current Ratio1.591.64
Debt/Capital0.420.37
Interest Expense182.0172.0
Interest Coverage13.1112.54


Share Data Q1 FY17 Q1 FY16
Shares outstanding (mil)2740.442769.55
Div / share0.470.46
EPS0.560.4
Book value / share14.5415.82
Institutional Own % n/a n/a
Avg Daily Volume8861247.01.0621859E7

Valuation


BUY. The current P/E ratio indicates a significant discount compared to an average of 84.59 for the Pharmaceuticals industry and a significant premium compared to the S&P 500 average of 25.73. Conducting a second comparison, its price-to-book ratio of 4.35 indicates a premium versus the S&P 500 average of 3.08 and a significant discount versus the industry average of 10.76. 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 40.77 Peers 84.59   MRK 20.38 Peers 19.60

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

MRK is trading at a significant discount to its peers.

 

Average. 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 valuation on par 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 15.15 Peers 16.00   MRK 0.24 Peers 0.70

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 4.35 Peers 10.76   MRK -4.91 Peers 19.71

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 4.34 Peers 11.00   MRK 1.38 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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