MRK
Merck & Co. · Health Care · Pharmaceuticals
$150.66
52w 77.58 – 154.49
20y monthly, adjusted
Mkt cap
$371.7B
P/E
20.4
P/FCF
30.1
FCF yield
3.3%
ROE
34.7%
Shldr yield
3.6%
div 2.2% + bb 1.4%
What today's price assumes
At $371.7B, the market is pricing in 13.3% annual free-cash-flow growth for the next decade (10% discount rate, 2.5% terminal growth). Over the last ten years, FCF actually grew 2.0% per year — the price asks for acceleration beyond the historical record.
Simple DCF per-share range: $66 · $66 · $82 (4% / base / optimistic growth). An estimate, not a target.
Historical multiple lens
At its own median P/OCF of 13.7× across 13 years, MRK would trade near $92/share (25th–75th percentile: $79–$110); it trades at 22.6× today.
Assumes the historical multiple regime persists — re-ratings can be permanent.
Growth record
Compound annual growth rates from as-filed 10-K data, split-adjusted
Rev 3y
+3.1%
Rev 5y
+9.4%
Rev 10y
+2.3%
EPS 5y
+21.2%
EPS 10y
+209.8%
FCF 5y
+16.2%
FCF 10y
+2.0%
Fundamentals
Fiscal 2007–2025, from SEC filings
Revenue
Net income
Free cash flow
Diluted shares (lower is better)
Margins
Capital returned (dividends + buybacks)
Cash vs long-term debt
Quarterly
Discrete quarters from 10-Q filings; Q4 derived as fiscal year minus Q1–Q3. OCF is unwound from the year-to-date figures 10-Qs report. Compare to the same quarter a year ago — most businesses are seasonal.
Revenue by quarter
Net income by quarter
| Quarter | Revenue | YoY | Net income | YoY | EPS | OCF |
|---|---|---|---|---|---|---|
| Q2'26 | $16.6B | +5.1% | −$1.3B | −130.2% | -0.54 | $5.4B |
| Q1'26 | $16.3B | +4.9% | −$4.2B | −183.5% | -1.72 | $3.9B |
| Q4'25 * | $16.4B | +5.0% | $3.0B | −20.8% | 1.19 | $2.9B |
| Q3'25 | $17.3B | +3.7% | $5.8B | +83.2% | 2.32 | $7.8B |
| Q2'25 | $15.8B | −1.9% | $4.4B | −18.8% | 1.76 | $3.3B |
| Q1'25 | $15.5B | −1.6% | $5.1B | +6.7% | 2.01 | $2.5B |
| Q4'24 * | $15.6B | +6.8% | $3.7B | — | 1.49 | $3.5B |
| Q3'24 | $16.7B | +4.4% | $3.2B | −33.5% | 1.24 | $9.3B |
| Q2'24 | $16.1B | +7.2% | $5.5B | — | 2.14 | $5.6B |
| Q1'24 | $15.8B | +8.9% | $4.8B | +68.8% | 1.87 | $3.1B |
| Q4'23 * | $14.6B | +5.8% | −$1.2B | −140.6% | -0.48 | $246.0M |
| Q3'23 | $16.0B | +6.7% | $4.7B | +46.1% | 1.86 | $7.7B |
| Q2'23 | $15.0B | +3.0% | −$6.0B | −251.5% | -2.35 | $3.7B |
Track record
Compound annual growth by period. For debt and share count, negative is the good direction.
| Series | 3y | 5y | 10y | 15y |
|---|---|---|---|---|
| Revenue | +3.1% | +9.4% | +2.3% | +2.3% |
| Operating cash flow | −4.8% | +9.9% | +2.8% | +2.8% |
| Free cash flow | −5.6% | +16.2% | +2.0% | +2.0% |
| EPS (diluted) | +8.4% | +21.2% | +209.8% | +209.8% |
| Equity | +4.6% | +15.8% | −0.2% | −0.2% |
| LT debt | +17.6% | +13.0% | +7.6% | +7.6% |
| Diluted shares | −0.5% | −0.3% | −0.7% | −0.7% |
| Stock price | +14.9% | +18.2% | +13.1% | +14.6% |
$100, 3 years ago
$152vs $176 in SPY
14.9% vs 20.7%/yr
$100, 5 years ago
$231vs $181 in SPY
18.2% vs 12.6%/yr
$100, 10 years ago
$342vs $412 in SPY
13.1% vs 15.2%/yr
$100, 15 years ago
$777vs $813 in SPY
14.6% vs 15.0%/yr
The $1 test — market value created per $1 of earnings retained (Buffett's hurdle: at least $1)
Last 5 years
$4.40
$115.3B created / $26.2B retained
Last 10 years
$7.76
$219.5B created / $28.3B retained
Quality & capital discipline
Cash-based returns and how management deploys capital
Cash ROIC
16.6%
OCF ÷ (equity + debt)
OCF / EV yield
4.1%
MC vs 10× OCF
2.26
≤1 = priced under 10× OCF
Debt / FCF
3.8y
SBC / FCF
6.6%
Owner earnings
$11.5B
OCF − capex − SBC
OE yield
3.1%
Share count 5y
−0.3%
per year; negative = buybacks
Growth engine (5y): reinvested 50.7% of operating cash flow at an incremental return of 14.7% — an organically fundable growth rate of about 7.5% per year (growth ≈ reinvestment rate × incremental ROIC).
Checklist
19 of 24 checks pass · 79%. Checks with structurally missing inputs are excluded.
Growth & Consistency
7/7
- pass
Revenue growth
9.4% · 5y CAGR ≥ 5%
- pass
EPS growth
21.2% · 5y CAGR ≥ 5%
- pass
FCF growth
16.2% · 5y CAGR ≥ 5%
- pass
Revenue rises consistently
8 of 9 · up in ≥ 7 of last 10 years
- pass
FCF consistently positive
10 of 10 · positive in ≥ 8 of last 10 years
- pass
Profitable every year
10 of 10 · net income > 0 in ≥ 8 of last 10
- pass
Cash flow keeps up with sales
9.9% vs 9.4% · OCF CAGR ≥ 0.9× revenue CAGR
Profitability
4/5
- pass
Net margin
28.1% · ≥ 8%
- na
Operating margin
— · ≥ 10%
- na
Gross margin stable or rising
— · no drop > 2 pts over 3y
- pass
Return on equity
34.7% · ≥ 12%
- pass
Cash ROIC
16.6% · ≥ 12%
- pass
FCF margin
19.0% · ≥ 5%
- fail
Earnings back their cash
OCF $16.5B vs NI $18.3B · OCF ≥ net income (latest FY)
Balance Sheet
2/4
- fail
Debt payable from cash flow
3.8y · LT debt ≤ 3× FCF
- fail
Cash cushion
31% · cash ≥ 50% of LT debt
- pass
Leverage
0.89 · LT debt ≤ 1.5× equity
- pass
Equity positive and compounding
$52.6B · equity > 0 and grew over ~5y
- na
Interest burden
— · interest ≤ 15% of operating income
Capital Allocation
3/4
- pass
Share count flat or shrinking
-0.3% · ≤ +0.5%/yr over ~5y
- pass
Stock comp restrained
7% · SBC ≤ 15% of FCF
- fail
Distributions funded by FCF
107% · dividends + buybacks ≤ 100% of FCF
- pass
Repurchases are a habit
9 of 10 · buybacks in ≥ 5 of last 10 years
Valuation Discipline
3/4
- pass
FCF yield
3.3% · ≥ 3%
- pass
Earnings multiple
20.4 · P/E ≤ 25
- fail
Price asks less than history delivered
13.3% vs 2.0% · implied FCF growth ≤ historical FCF CAGR
- pass
Shareholder yield
3.6% · dividends + buybacks ≥ 2% of market cap
Red flags
Mechanical checks — a flag is a question to investigate, not a verdict
Distributions exceed FCF
Dividends plus buybacks exceeded free cash flow in the latest fiscal year.
Financial data
As filed in 10-Ks; per-share figures split-adjusted. $ in millions.
| FY | Revenue | Gross profit | Op income | Net income | EPS | OCF | CapEx | FCF | Dividends | Buybacks | SBC | Cash | LT debt | Equity | Shares |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2025 | 65,011 | — | — | 18,254 | 7.28 | 16,472 | 4,112 | 12,360 | 8,176 | 5,084 | 820 | 14,565 | 46,750 | 52,606 | 2,507 |
| 2024 | 64,168 | — | — | 17,117 | 6.74 | 21,468 | 3,372 | 18,096 | 7,840 | 1,306 | 761 | 13,242 | 34,462 | 46,313 | 2,541 |
| 2023 | 60,115 | — | — | 365 | 0.14 | 13,006 | 3,863 | 9,143 | 7,445 | 1,346 | 645 | 6,841 | 33,683 | 37,581 | 2,547 |
| 2022 | 59,283 | — | — | 14,519 | 5.71 | 19,095 | 4,388 | 14,707 | 7,012 | 0 | 541 | 12,694 | 28,745 | 45,991 | 2,542 |
| 2021 | 48,704 | — | — | 13,049 | 5.14 | 13,122 | 4,448 | 8,674 | 6,610 | 840 | 479 | 8,096 | 30,690 | 38,184 | 2,538 |
| 2020 | 41,518 | — | — | 7,067 | 2.78 | 10,253 | 4,429 | 5,824 | 6,215 | 1,281 | 441 | 8,050 | 25,360 | 25,317 | 2,541 |
| 2019 | 39,121 | — | — | 9,843 | 3.81 | 13,440 | 3,369 | 10,071 | 5,695 | 4,780 | 388 | 9,676 | 22,736 | 25,907 | 2,580 |
| 2018 | 42,294 | — | — | 6,220 | 2.32 | 10,922 | 2,615 | 8,307 | 5,172 | 9,091 | 348 | 7,965 | 19,806 | 26,701 | 2,679 |
| 2017 | 40,122 | — | — | 2,394 | 0.87 | 6,451 | 1,888 | 4,563 | 5,167 | 4,014 | 312 | 6,092 | 21,353 | 34,336 | 2,748 |
| 2016 | 39,807 | — | — | 3,920 | 1.41 | 10,376 | 1,614 | 8,762 | 5,124 | 3,434 | 300 | 6,515 | 24,274 | 40,088 | 2,787 |
| 2010 | 45,987 | — | — | 861 | 0.00 | 10,822 | 1,678 | 9,144 | 4,734 | 1,593 | 509 | 10,900 | 15,482 | 54,376 | 2,787 |
| 2009 | 27,428 | — | — | 12,899 | 4.61 | 3,392 | 1,461 | 1,931 | 3,215 | 0 | 415 | 9,311 | 16,095 | 59,058 | 2,787 |
| 2008 | 23,850 | — | — | 7,808 | 2.96 | 6,572 | 1,298 | 5,274 | 3,279 | 2,725 | 348 | 4,368 | 3,943 | 18,758 | 2,628 |
| 2007 | 24,198 | — | — | 3,275 | 1.22 | 6,999 | 1,011 | 5,988 | 3,307 | 1,430 | 330 | 5,336 | — | 20,591 | — |
Some concepts are structurally absent for certain industries (banks report no gross profit or capex). Missing ≠ zero.