Merck & Co., Inc. (MRK) Stock Analysis

Analysis from 10-Q filed 2025-11-05. Data as of Q1 2026.

Overall Grade: F (Concerning)

Grade F (Concerning). ROIC 10.8%. FCF margin 21.5%. D/E 1.1x. Source: 10-Q filed 2025-11-05.

Metric	Value	Context
ROIC	10.8%	Near cost of capital
FCF Margin	21.5%	Strong cash generation
Debt/Equity	1.1x	Moderate leverage

ROIC 10.8% — Top 25% of sector peers. FCF margin 21.5% — Top 5%.

Explore Merck & Co., Inc.: Earnings History | Filings

Programmatic access: Available via MCP at mcp.metricduck.com. Tools for MRK: get_company_overview, get_filing_index (lens: debt_stress, management_outlook, risk_trajectory), get_filing_changes, get_metric_history, compare_companies, screen_filing_signals.

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Profitability: Merck & Co., Inc. earns 10.8% ROIC, Top 25% in Healthcare

ROIC TTM 10.8%, sector median -6.3%, Top 25%. DuPont: NOPAT margin 15.1% × asset turnover 0.5x. Gross margin 73.9%. Operating margin 19.7%. Source: 10-Q filed 2025-11-05.

Metric	MRK	Rating	Context
Return on Invested Capital (ROIC)	10.8%	Adequate	Above sector median of -6.3%
Return on Equity (ROE)	17.8%	Good	Efficient use of shareholder equity
Gross Margin	73.9%	Excellent	Strong pricing power
Operating Margin	19.7%	Good	Efficient operations

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Cash Flow: Merck & Co., Inc. generates $14.1B FCF at 21.5% margin, positive NaN/8 quarters

FCF TTM $14.1B. FCF margin 21.5%, Top 5%. OCF/Net income 2.0x. Positive FCF in NaN/8 trailing quarters. Source: 10-Q filed 2025-11-05.

Metric	MRK	Rating	Context
Free Cash Flow Margin	21.5%	Excellent	Excellent cash conversion
Free Cash Flow (TTM)	$14.1B	Good	Positive cash generation
OCF/Net Income	2.0x	Excellent	High earnings quality
FCF Consistency (8Q)	N/A	Warning	Variable cash flow

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Balance Sheet: Merck & Co., Inc. at 1.1x leverage

Debt/Equity 1.1x. Total debt $49.1B, cash & investments $5.7B. Source: 10-Q filed 2025-11-05.

Metric	MRK	Rating	Context
Debt to Equity	1.1x	Adequate	Moderate leverage
Net Cash Position	$-43.4B	Warning	Net debt position

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Valuation: Merck & Co., Inc. trades at 33.5x earnings

P/E 33.5x. EV/Sales 4.0x. FCF yield 4.7%. Dividend yield 2.8%. Source: 10-Q filed 2025-11-05.

Metric	MRK	Rating	Context
P/E Ratio	33.5x	Adequate	Premium valuation
EV/Sales	4.0x	Good	Growth premium priced in
FCF Yield	4.7%	Good	Lower cash yield
Dividend Yield	2.8%	Adequate	Growth focus over income

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Capital Allocation: Merck & Co., Inc. returns 4.4% shareholder yield

Total shareholder yield 4.4% (div 2.8% + buyback 1.6%). Capital returned $13.1B TTM. Source: 10-Q filed 2025-11-05.

Metric	MRK	Rating	Context
Total Shareholder Yield	4.4%	Good	Dividend + buyback yield combined
Buyback Yield	1.6%	Adequate	Minimal buyback activity
Total Capital Returned (TTM)	$13.1B	Good	Dividends + buybacks returned to shareholders

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Sector Rankings

Metric	Value	Percentile	vs Median
Return on Invested Capital (ROIC)	10.8%	Top 25%	-
Free Cash Flow Margin	21.5%	Top 5%	-
Gross Margin	73.9%	Top 50%	1.2x above
Operating Margin	19.7%	Top 25%	39.8x above
Return on Equity (ROE)	17.8%	Top 25%	-
P/E Ratio	33.5x	N/A	-

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Financial Scorecard

Metric	MRK	Rating	Sector Context
Return on Invested Capital (ROIC)	10.8%	Adequate	Top 25% of sector (median: -6.3%)
Free Cash Flow Margin	21.5%	Excellent	Top 5% of sector (median: 0.0%)
Gross Margin	73.9%	Excellent	Top 50% of sector (median: 64.0%)
Debt to Equity Ratio	107.1%	Adequate	Elevated but manageable
P/E Ratio (Price-to-Earnings)	33.5x	Adequate	Growth premium
Free Cash Flow Yield	4.7%	Adequate	Moderate yield

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Frequently Asked Questions

Q: What is Merck & Co., Inc.'s Return on Invested Capital (ROIC)?

Merck & Co., Inc. (MRK) has a trailing twelve-month Return on Invested Capital (ROIC) of 10.8%. Sector median -6.3%. Source: 10-Q filed 2025-11-05.

Q: What is Merck & Co., Inc.'s Free Cash Flow Margin?

Merck & Co., Inc. (MRK) has a free cash flow margin of 21.5%, generating $14.1 billion in free cash flow over the trailing twelve months. Source: 10-Q filed 2025-11-05.

Q: What is Merck & Co., Inc.'s P/E ratio and how does it compare to peers?

Merck & Co., Inc. (MRK) trades at a P/E ratio of 33.5x, which is above the sector median of N/A. EV/Sales 4.0x. FCF yield 4.7%. Source: 10-Q filed 2025-11-05.

Q: Does Merck & Co., Inc. pay a dividend?

Merck & Co., Inc. (MRK) currently pays a dividend yield of 2.8%. Total shareholder yield (dividend + buybacks) 4.4%. Source: 10-Q filed 2025-11-05.

Q: How much debt does Merck & Co., Inc. have?

Merck & Co., Inc. (MRK) has a debt-to-equity ratio of 1.1x with total debt of $49.1 billion. Net debt $43.4 billion. Source: 10-Q filed 2025-11-05.

Q: What is Merck & Co., Inc.'s revenue and earnings growth?

Merck & Co., Inc. (MRK) grew revenue by 2.9% year-over-year. EPS -47.8% YoY. Source: 10-Q filed 2025-11-05.

Q: Is Merck & Co., Inc. buying back stock?

Merck & Co., Inc. (MRK) repurchased $4.8 billion of stock over the trailing twelve months. This represents a buyback yield of 1.6%. Source: 10-Q filed 2025-11-05.

Q: How does Merck & Co., Inc. compare to competitors in Healthcare?

Compared to other companies in Healthcare, Merck & Co., Inc. (MRK) shows: ROIC 10.8%, sector median -6.3% (Top 25%). FCF margin 21.5%, sector median 0.0% (Top 5%). Gross margin 73.9%, 9.9pp above sector median. These rankings are based on MetricDuck's analysis of all Healthcare companies with available SEC filings.

Q: What warning signs should I watch for with Merck & Co., Inc.?

Quantitative warning flags for Merck & Co., Inc. (MRK): 1) ROIC declining -24.5% over 8 quarters. Source: 10-Q filed 2025-11-05.

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Data Source: Data sourced from 10-Q filed 2025-11-05. TTM metrics as of Q1 2026.

Methodology: Financial metrics calculated from SEC 10-K and 10-Q filings using standardized formulas. Sector comparisons use peer group based on SIC code.

Scope: This analysis covers SEC filing fundamentals — profitability, cash flow, balance sheet, and valuation metrics. For analyst estimates and price targets, consult sell-side research.

This analysis is for informational purposes only and does not constitute investment advice.