About Merck

Merck Sharp & Dohme, better known simply as Merck, is a major pharmaceutical company headquartered in Kenilworth, New Jersey. Aside from its expansive medical testing and lab related business(es), the pharma giant is responsible for producing well-known, everyday use medicines ranging from Claritin and Propecia to Keytruda and Coppertone sunscreen.

Merck’s financials

Being one of the largest pharmaceutical companies in the world has its perks!

Merck currently stands as a $203.84 billion company. The company’s balance sheet is strong with total assets handsomely outweighing total liabilities. Relative to its industry, Merck appears slightly undervalued from a price to earnings and price to book standpoint.

Merck’s current debt ratios don’t raise any red flags, as it holds a level of debt on par with its industry’s average. However, the medical research and development company does stand out when compared to its peers regarding effectiveness and capital efficiency.

Specifically, Merck’s return on assets rests above the industry average at just north of 7%. While the company holds lower overall profit margins than competitors such as Johnson & Johnson, what Merck lacks in short term growth, it compensates fashionably in stability and efficiency.

Over the past five years, the company’s stock has provided investors with gradual, steady returns. The company also currently maintains an annual dividend of $2.60.

The future of Merck

The past looks like the future for Merck. Low volatility, long term and gradual stock price appreciation, and an indefinite dividend payout is how we see Merck for the next hundred years. While this is a boring stock, it won’t take you on a rollercoaster. The pharmaceutical behemoth holds considerable market share and maintains the rights to various everyday drugs and treatments.

Organic and nonorganic growth will be fueled by their continual investment in research and development and strategic acquisitions made over time.

In fact, Merck recently finalized their acquisition of Acceleron Pharma.  

Should you buy Merck stock?

Merck is one of those stocks that you buy, gradually buy dips, and don’t ever worry about selling. A household pharmaceutical company and staple in the industry, their stock is one that you don’t worry about timing the bottom, but rather, buying the stock and holding it for a long time.

We currently give the company a “buy” and “hold” rating.