Merck KGaA

MKGAF

Drug Manufacturers - Specialty & Generic · Healthcare

Price

$158.94

+0.43 (+0.27%)

Market Cap

$69.10B

Exchange

Other OTC

Winston Score

Winston is serious

Mixed quality — meaningful strengths and weaknesses.

Merck KGaA is a German science and technology company that makes medicines, laboratory supplies, and specialty chemicals. Its healthcare division sells drugs for multiple sclerosis, fertility treatments, and cancer. Its life science division sells tools and materials to research labs and drug manufacturers worldwide, and its electronics division makes specialty chemicals used to produce semiconductors and displays.

The company earns money through product sales across all three divisions, with life science and electronics providing more stable, recurring demand than traditional pharmaceuticals. Merck KGaA operates globally, with significant revenue from North America, Europe, and Asia, and generates roughly €22 billion in annual sales. It is a separate company from the American Merck & Co., despite sharing a name and common historical roots. Its main competitive strength is the combination of specialized scientific expertise across three distinct but related industries, though slower growth in its life science division following a post-pandemic inventory correction remains a near-term challenge.

Winston Score History

Share count broadly stable

0.0% over 4y

The share count has stayed roughly flat over this period — little dilution or buyback activity.

Diluted shares outstanding: 434.8M (2021) → 434.8M (2025)

Score breakdown

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Quality

Gross Margin

59.7%

Premium pricing power — 59.7% gross margin

Operating Margin

19.3%

Healthy — 19.3% operating margin

ROCE

2.4%

Weak — 2.4% return on capital

ROIC between 0% and 5%. They earn a few cents back per dollar invested in the business.

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Growth

Sales YoY

-1.6%

Shrinking sales (-1.6% YoY)

EPS YoY

-10.2%

Earnings shrinking (-10.2% YoY)

Earnings per share down more than 10%. Either a bad year, or a real decline.

EPS Consistency

4/8 quarters

Earnings inconsistent quarter-to-quarter

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Cash Flow

Cash Conversion

176%

Turns 176% of profit into real cash

FCF Margin

12.9%

Converts sales into free cash efficiently (12.9%)

FCF margin between 10% and 20%. Every $100 in sales becomes $10 to $20 in real cash.

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Stability

Debt / Equity

0.40

Conservative — low debt load (0.40)

Interest Cover

8.60x

Comfortably covers interest (8.6x)

Interest coverage above 8. Profits cover interest many times over.

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Valuation

P/E Ratio (TTM)

27.3x

Growth-priced — P/E 27.3

P/E above the market average. People are paying up for expected growth.

P/E vs Forward

+10.7

GROWING

Earnings expected to grow meaningfully — cheaper on forward P/E (27.3 → 16.6)

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Dividends

Dividend Yield

1.63%

Small dividend — 1.63% yield

Modest yield. The bulk of any return needs to come from price appreciation.

Dividend Growth

+51.4%

Dividend growing fast (51.4% YoY)

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