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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
Merck & Co., Inc. (XNYS:MRK) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
MRK
Name:
MERCK & CO., INC. (XNYS:MRK)
Sector:
3.78B
Industry:
Drug Manufacturers�General
CEO:
Mr. Kenneth Frazier
Total Employees:
68,000
Our Technological Advancement Rating
Our Rating:
A
Technological advancement compared to industry is 71.09% higher
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF MERCK & CO., INC.(MRK) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND DRUG MANUFACTURERS�GENERAL INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
86.23
One Month Price Target:
$86.39
Six Month Price Target :
$87.22
Likely Price in One Year's Time:
Ticker:
$88.2
Likely Trading Range Today Under (Normal Volatility)
$86.
Price Upper limit ($) :
$86.48
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$83.34
This week:
$79.78
This month :
$73.33
Other Primary facts
Market Cap:
219.00B
Market Cap Classification:
Large Cap
Number of Shares
IPO Date:
2.53B
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
8.37%
-9.86%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$99.62
$93.50
$72.84
$78.96
Medium risk (<10%) entry points
Buy Call
Sell Call
$91.51
Buy Put:
Sell Put:
$90.21
$80.93
$82.25
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
MRK
Sharpe Ratio:
0.42%
Comparison:
MRK, is amongst the top 60% stocks with highest risk-adjusted returns
Sharpe ratio is -78.47% lower than the industry
& is -81.49% lower than the market/S&P 500 average
Average Returns/Yield of
MRK
Daily returns:
0.02%
Weekly returns:
0.08%
Monthly returns:
0.32%
Yearly returns:
11.30%
Comparison of returns:
Average annual returns/yield (last 3 years) is -66.55% below industry average
Classification:
MRK, is amongst the top 40% lowest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.17
Statistical test of Returns:
MRK has yielded returns statistically similar to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
1.64%
Weekly Volatility:
3.66%
Monthly Volatility:
7.32%
Yearly Volatility:
25.36%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
1.70%
Volatility in last five trading days has been 3.76% above long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-3.35%
Weekly VaR:
-7.48%
Monthly VaR:
-14.96%
How Much Can the price of
MRK
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-13%
Worst case (decline):
-51.83%
This translates to price declining to:
$74.97
This translates to price declining to:
$41.53
Severe Crash Probability
Risk of crash in next 6/12 months: Medium (<50%)
What is Value at Risk (VaR)?
Risk Fundamentals
MRK is a 5.61% riskier investment compared to the market/S&P 500 & is -9.53% less risky than Nasdaq(IXIC)
Risk (measured by volatility) is -13.75% below industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
MRK
Beta in relation to market/S&P 500--0.34
Expected beta in 1 year's time:
0.449
Expected beta in 3 year's time:
0.635
Unlevered (debt free) Beta:
0.205
Beta in relation to Nasdaq (XNAS):
0.383
Beta in relation to all global stocks::
0.54
Beta Comparison & Analysis
Beta of competitors/peers::
0.631
Beta is -46.04% lower than peers
Average Industry Beta:
0.492
Beta is -30.72% below industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
21.24%
Sustainable growth rate is -69.80% below industry average
Alpha provided | Alpha Analysis
Alpha provided:
-0.017
Alpha is -135.57% below industry average alpha yield
Alpha is -108% below the market average
Analysis of Cost of Capital of
MRK
Equity cost of capital:
0.055
Equity cost of capital is -15.87% below industry mean WACC
Unlevered (without debt) cost of capital:
3.30%
Before-tax cost of debt:
2.67%
After-tax cost of debt:
2.11%
Overall debt rating:
High AA grade (second highest grade)
Weighted average cost of capital (WACC):
2.11%
WACC is -8.39% below industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$21.31
Revenue growth rate per share of (3Y):
5.33
Annual revenue growth rate is -22.06% below industry average
EPS:
$5.59
Expected Annual growth rate of EPS (3Y):
7.83%
Expected future EPS growth rate is -529.43% lower than the Drug Manufacturers�General industry
Free cash flow (FCF) per share:
$4.99
Balance sheet equity growth per share: 30.96%
Equity growth rate per share is 33.70% higher than the industry
Debt per share
$12.07
EBITDA per share
$8.00
Valuation Analysis Today of
MRK
P/E Ratio:
13.15
P/E Ratio of Competitors/Peers:
77.25
P/E ratio is -82.98% lower than main peers & is -27.32% lower than the industry
Stock price/value with industry average P/E ratio: $101.11
MRK is -14.71% undervalued if valued using industry average P/E ratio
Share value as per dividend discount (DDM) model: $88.95
Present value of the expected future dividends only: $65.37
P/S (Price to Sales ratio):
4.05
Price to sales ratio is 8.95% above the industry mean
P/B (Price to book value ratio):
5.33
Price to free cash flow: 17.29
-
Net income growth rate (3Y):
114.98%
Net income growth rate is -13.39% lower than the industry average net income growth rate
Dividend Analysis
Dividend payout rate: 12.31%
Dividend yeild: 3.15%
Previous Dividend: $0.69
Previous adjusted dividend: $0.69
Previous Dividend: $2.72
Expected next dividend best case: $0.72
Expected next dividend worst case: $0.66
Average dividend payment (long-term): $0.65
Average dividend increase/decrease (growth rate) % per period: 1.27%
Expected next dividend payment date: 10/06/2022
Expected next dividend record date: 13/09/2022
-
Previous dividend payment date: 07/08/2022
Previous dividend record date: 15/06/2022
-
Dividend History:
2022-06-14--$0.69
2021-12-14--$0.69
2021-06-14--$0.65
2022-03-14--$0.69
2021-09-14--$0.65
2021-03-12--$0.62
Dividend growth rate is -83.10% lower than the industry average
In-depth Debt & Leverage Analysis
Debt to equity ratio:
74.81%
Net debt to equity ratio:
56.84%
Debt to assets ratio:
28.67%
Net debt to assets ratio:
21.79%
Debt-to-asset ratio is -57.89% below industry average
Ability to repay debt:
Interest coverage ratio:
23.85
Interest coverage ratio is -44.37% less than industry average
Looking forward:
Debt growth rate:
4.12%
Annual debt growth is -834% lower than industry average debt growth rate
Debt repayment rate in last quarter: 3.93%
Analysis of Key Statistics
Correlation of price movement with the market:
0.531
Statistical significance of correlation:
MRK has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.517
Stock price is 2.73% more correlated with the market, compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.517
Correlation of price movement with Nasdaq (^IXIC):
0.037
Covariance of price movement with the market:
0.035
Kurtosis
6.799
Returns have a significant fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are more probable, compared to assets with normally distributed returns
Skewness of returns:
-0.05
Returns are, approximately, symmetrical
Fundamental Analysis & Dupont Analysis of
MRK
Gross Profit Margin Ratio:
284%
Operating Profit Margin Ratio:
29.62%
Operating profit margin is 36.44% higher than the industry
Net Profit Margin Ratio:
284%
Effective Tax Rate:
11.66%
Effective tax rate is 11.40% higher than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
34.68%
Return on equity (ROE) is -65.45% lower than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
13.29%
Return on assets (ROA) is 27.96% higher than the industry
Financial Leverage:
1.4x
Current Ratio:
1.4
Current ratio is -0.80% below industry average
Cash Conversion Cycle (days):
-14.2
Cash conversion cycle is -114.26% below industry average
The remaining useful life of property plant & equipment is: 2.5 years
Stock based compensation to net income ratio:
0.85%
In-depth Efficiency Analysis
Revenue generated per employee:
793.8K
Each employee generates -30% less revenue than industry average revenue per employee
EBITDA generated per employee:
298.1K
Each employee generates -24% less EBITDA than industry average revenue per employee
Profit generated per employee:
208.5K
Each employee generates -5% less net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
55.5K
Each employee generates -20% less free cash flow than industry average revenue per employee
Assets/Capital per employee
1.1M
Each employee generates -20% less free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
Research & development (R&D) investment growth rate-- -9.68%
Growth rate in R&D investment/expenditure is -141.82% lower than the industry
Competitors/Peer firms of
MRK
Novartis Inc. (XNYS:NVS)
DANAHER CORPORATION (XNYS:DHR)
ASTRAZENECA PLC (XNAS:AZN)
ABBVIE INC. (XNYS:ABBV)
THERMO FISHER SCIENTIFIC INC. (XNYS:TMO)
ABBOTT LABORATORIES (XNYS:ABT)
ELI LILLY AND COMPANY (XNYS:LLY)
MEDTRONIC PUBLIC LIMITED COMPANY (XNYS:MDT)
BRISTOL-MYERS SQUIBB COMPANY (XNYS:BMY)
Current Analyst Ratings
Strong buy�17%
Buy�29%
Hold�42%
Sell�0%
Strong sell�0%
Overall analyst sentiment is: Hold
Income Statement
Period:
TTM
Date:
3/31/22
Revenue:
53.98B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
15.81B
38.17B
12.41B
-
9.77B
-
-
22.18B
32.00M
850.00M
3.40B
20.27B
15.99B
14.18B
15.75B
1.84B
14.18B
Statement of Cash Flow
Date:
Period:
1.12B
Differed Income Tax :
- 338000.00K
Stock Based Compensation :
120.00M
Change in Working Capital :
- 1299000.00K
Accounts Receivables:
-
Other Working Capital:
-
Other Non-Cash Items:
851.00M
Net Cash Provided by Operating Activities:
4.76B
Investments in PP&E:
-
Net Acquisitions:
-
Purchases of Investments:
- 372000.00K
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
3/31/22
2022
Q1
8.56B
372.00M
8.93B
9.83B
5.77B
6.65B
31.18B
19.75B
21.26B
23.02B
316.00M
-
11.14B
75.48B
-
106.67B
3.72B
1.21B
1.57B
-
17.39B
22.32B
30.59B
9.74B
43.40B
-
65.72B
1.79B
56.25B
- 4369000.0K
-
March 31, 2022 at 6:00:00 AM
37.99B
40.88B
106.60B
688.00M
31.79B
23.2B
1.00M
- 802000.00K
- 1173000.00K
- 1250000.00K
-
-
- 1745000.00K
- 91000.00K
- 3086000.00K
- 55000.00K
447.00M
8.61B
8.17B
4.76B
- 984000.00K
3.78B
Our Proprietary Portfolio Rating
Our Rating:
A
Price Forecast/Expected Price in Next 5 Years of
MRK
2023
2024
2025
2026
2027
$88.64
$90.67
$92.75
$94.87
$97.04