Is Merck & Co., Inc. (MRK) Fairly Valued?
Merck & Co., Inc. valuation review using P/E, fair value, revenue growth, EPS growth, net margin, and TGMCharts chart exhibits as of September 9, 2026.
By TGMCharts Research · Data as of · Updated
Merck & Co., Inc. trailing earnings multiple of 118.08x sits alongside an analyst DCF (FMP) reference of $182, indicating the current market price is below the independent intrinsic value estimate.
The core evidence is the relationship between price, earnings, fair value, and business support. Five-year revenue CAGR is 7.87%, five-year EPS CAGR is 21.21%, and net margin is 4.78%. Those facts decide whether the multiple is defensible or stretched.
- Merck & Co., Inc. closed at $148 on September 9, 2026.
- Trailing P/E is 118.08x and price-to-sales is 5.49x.
- Analyst DCF (FMP) is $182 with margin of safety at 23.64%.
- Five-year revenue CAGR is 7.87% and five-year EPS CAGR is 21.21%.
- Earnings yield is 0.85% and net margin is 4.78%.
Valuation Setup
The market price, model anchor, growth support, and profitability facts behind the valuation read.
Market Price Versus Long-Term Fundamentals
The investment profile of Merck & Co., Inc. presents a notable disconnect between high trailing earnings multiples and long-term valuation models. At the market close on September 9, 2026, the stock was priced at $148, which translates to a trailing price-to-earnings ratio of 118.08x. This elevated multiple is contrasted by an analyst-DCF (FMP) fair value estimate of $182, implying a margin of safety of 23.64%.
Assessing this setup requires looking beyond a single metric. The relationship between the market's willingness to pay and the underlying business performance is clarified by analyzing price-to-sales, earnings yield, and historical growth. When these metrics align, they provide a coherent framework for evaluating the stock's current market position.
Current compounder snapshot · MRK
Live supporting context; not part of the article's frozen 2026-09-09 evidence snapshot.
- Score
- 21/100
- 10Y CAGR
- 5.1%
- Median YoY
- 5.2%
- YoY volatility
- σ 11.3pp· uneven
- Quarters ≥ 20%
- 4 of 40
- Negative quarters
- 8
- Valuation vs own 10Y history
- P/S 5.5x · 10Y median 4.3x · 98th percentile · as of Sep 9, 2026
How this score is computed
- Quarters at or above 20%: 4 of 40 → 4 of 40 pts
- Steadiness (typical swing 11.3pp) → 16.9 of 25 pts
- Pace (median 5.2% YoY) → 0 of 20 pts
- Latest quarter (5.1% YoY) → 0 of 15 pts
- Score: 21 of 100
Annualized revenue (TTM) · by quarter, last 40
Quarterly YoY revenue growth vs the 20% line
P/S multiple vs its 10Y median
Evaluating Current Market Multiples
To understand what the market is paying for the business, we must examine the broader multiple context. The stock trades at a price-to-sales ratio of 5.49x, while the trailing earnings yield stands at 0.85%. This low earnings yield highlights how much future cash flow expansion is already incorporated into the current market price.
MRK P/E ratio Chart
The trailing earnings multiple is the main valuation exhibit because it connects the market price to reported earnings. Historical series through 2026-09-09.
Latest P/E ratio: 118.08x as of September 9, 2026.
A P/E ratio of 118.08x has to be judged against the company's five-year EPS CAGR of 21.21%. If the multiple is high while EPS support is ordinary, the valuation thesis becomes more dependent on investor confidence than on fresh earnings power.
MRK price-to-sales Chart
Price-to-sales gives a second valuation lens when margins and earnings can move around the cycle. Historical series through 2026-09-09.
Latest price-to-sales ratio: 5.49x.
Price-to-sales at 5.49x is most useful beside net margin of 4.78%. A richer sales multiple is easier to defend when margin quality is durable rather than temporarily elevated.
Discount to Third-Party Intrinsic Value Estimates
The market price of $148 sits below the third-party analyst DCF (FMP) reference of $182. This gap represents a margin of safety of 23.64%, suggesting that longer-term structural models project higher value than what is currently reflected in daily trading. However, this independent reference should be weighed alongside the company's operational trends rather than viewed as a definitive pricing target.
The valuation at a glance
Each input on its own line: what the stock costs against earnings and sales, the model's fair value and how far price sits from it, and the growth and margins behind the business.
MRK earnings yield Chart
Earnings yield reframes valuation from an owner's-yield perspective rather than a multiple perspective. Historical series through 2026-09-09.
Latest earnings yield: 0.85%.
The earnings yield of 0.85% is the counterweight to the P/E ratio. If the yield is thin relative to the quality and growth profile, the valuation case needs more help from future compounding.
Divergent Revenue and Per-Share Growth Trends
Operational support for the stock's valuation shows a divergence between top-line expansion and bottom-line delivery. Over the last five years, revenue has expanded at a compound annual growth rate of 7.87%, demonstrating steady commercial demand. Conversely, the five-year EPS CAGR of 21.21% reflects longer-term per-share compounding, but recent trailing twelve-month net income and EPS growth have turned negative, signaling near-term pressure on profitability.
MRK revenue
Revenue history tests whether the valuation is being supported by real business expansion. Q2 FY2026 (2026-06-30): $16.61B.
Five-year revenue CAGR: 7.87%. This is endpoint-to-endpoint across the five-year window — a depressed start year can inflate it, so read it against the recent bars.
Revenue growth is the business-expansion evidence behind the valuation read. A five-year revenue CAGR of 7.87% helps show how much of the valuation story is coming from company growth instead of only multiple expansion.
MRK EPS
EPS history checks whether reported earnings are keeping pace with the market multiple. Q2 FY2026 (2026-06-30): $-0.54.
Five-year EPS CAGR: 21.21%. This is endpoint-to-endpoint across the five-year window — a depressed or negative start year can inflate it, so read it against the recent bars.
A five-year EPS CAGR of 21.21% is the clearest support figure for a P/E-based conclusion. If EPS growth slows while the multiple remains elevated, the article should become more cautious after refresh.
Profitability Margins and Sales Multiple Alignment
The sustainability of the current price-to-sales ratio of 5.49x depends heavily on the company's profitability profile. Currently, the net margin is 4.78%. When net margins face downward pressure, a high sales multiple becomes more difficult to sustain, as investors must rely on significant top-line acceleration to restore earnings power.
MRK net margin
Net margin shows whether the company has enough profitability quality to support its valuation. Q2 FY2026 (2026-06-30): -8.04%.
Net margin (TTM): 4.78%. The bars below are reported fiscal periods (quarterly where available).
Net margin of 4.78% is a quality signal, not a valuation verdict by itself. It matters because a premium multiple is more defensible when margins are structurally strong and less defensible when margins are peaking.
The Core Valuation Debate
The positive case for the stock rests on its long-term compounding record, characterized by a five-year revenue CAGR of 7.87% and a substantial five-year EPS CAGR of 21.21%, alongside the discount to the analyst-DCF (FMP) reference. The negative case centers on the demanding trailing P/E of 118.08x occurring at a time when recent net income and EPS growth have turned negative, leaving little room for further operational deceleration.
Bull and bear case
Valuation support
- Five-year revenue CAGR of 7.87% and five-year EPS CAGR of 21.21% support the business case.
- Net margin of 4.78% is the quality check behind the multiple.
Valuation pressure
- A P/E ratio of 118.08x can become demanding if EPS growth slows.
- The analyst-DCF (FMP) margin of safety at 23.64% should change the valuation read if it deteriorates after refresh.
Key Metrics to Monitor for a Shift in Outlook
Several factors could alter this valuation perspective. A continued contraction in trailing twelve-month net income would further stretch the P/E multiple, while a downward revision of the analyst-DCF (FMP) reference below $182 would reduce the current margin of safety. Additionally, any deviation from the five-year historical revenue growth trend of 7.87% would require a reassessment of the stock's long-term trajectory.
Synthesis of Valuation and Operational Support
In conclusion, Merck & Co., Inc. presents a complex valuation picture where a high trailing earnings multiple of 118.08x is counterbalanced by a discount to the independent fair value reference of $182. For the current valuation structure to hold, the business must stabilize its recent negative earnings growth and maintain its historical margin profile. This analysis is based on historical financial filings and does not constitute investment advice.
FAQ
Is MRK fairly valued?
Merck & Co., Inc. trades at 118.08x trailing earnings, while the price gap versus the third-party DCF (FMP) estimate is 23.64%. Read those references alongside five-year revenue CAGR of 7.87% and five-year EPS CAGR of 21.21%; none is a standalone verdict.
What valuation metric matters most for MRK?
This article anchors on P/E, fair value, margin of safety, price-to-sales, earnings yield, revenue growth, and EPS growth. No single metric is treated as a recommendation.
How often should this MRK valuation view refresh?
Numbers here are as of September 9, 2026 — the note's dated snapshot. A note whose figures can no longer be verified against the company's reported data is corrected or unpublished rather than left stale.
What would change our mind
- A material move away from the analyst-DCF (FMP) reference of $182.
- A break in five-year EPS support, currently 21.21%.
- Margin quality drifting away from the latest net margin of 4.78%.
The bottom line
Merck & Co., Inc. valuation research note from TGMCharts Research, grounded in a dated fundamentals snapshot, chart exhibits, and linked source facts.
Read next: MRK fundamentalsContinue with Merck & Co., Inc.'s full stock page.How we checked this researchShowHide
Data snapshot · By TGMCharts Research.
Every number in this note comes from data we compute and store ourselves from the company's reported figures, plus verbatim excerpts from its SEC filings. When a value isn't available we say so — we never fill gaps with estimates.
Latest filing excerpt
10-Q · filed 2026-08-07 · period 2026-06-30 · SEC EDGAR source
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