Merck & Co.

MRK

Drug Manufacturers - General · Healthcare

Price

$127.50

-0.13 (-0.10%)

Market Cap

$314.90B

Winston Score

Winston is curious

A decent business — some strong pillars, some weaker.

Share count falling — buybacks

−1.2% over 4y

The company has reduced its share count over this period, returning value to shareholders through buybacks.

Diluted shares outstanding: 2.54B (2021) → 2.51B (2025)

Merck is a large pharmaceutical company that discovers, makes, and sells prescription medicines, vaccines, and animal health products. Its biggest product is Keytruda, a cancer treatment that has become one of the best-selling drugs in the world. Merck sells to hospitals, doctors, pharmacies, and governments across more than 140 countries.

Merck earns most of its revenue by selling branded prescription drugs at negotiated prices to insurers, hospitals, and government health programs. It operates globally, with significant sales in the United States, Europe, and Asia, and generates roughly $60 billion in annual revenue. The company's main competitive advantage is its large portfolio of patented drugs and a deep pipeline of drugs in development. The biggest risk Merck faces is that Keytruda's core patents begin expiring around 2028, which could sharply reduce revenue unless new drugs in its pipeline successfully reach the market.

Winston Score History

Politician Trades

27 trades / 12mo

13 Congressional buys and 14 sells on MRK in the last 12 months.

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Growth Profile

For growth stock investors

When traditional metrics don't capture the full picture, these are the signals growth stock investors use instead.

Revenue Growth

+5.0% YoY

YoY Growth Rate

Slow revenue growth

EPS Growth

-19.6% YoY

YoY Growth Rate

Earnings declining

R&D Spend

$12.5B/ year

↓ Declining (-30% vs prior year)

19.3% of revenue

In line with sector average (18%)

R&D spend declining — could signal cost-cutting or efficiency

Insider Activity

0.2%ownership

→ Flat

Insiders holding steady — not selling despite ability to

Cash Position

Cash flow positive

$14.6B cash & investments

Quarterly Free Cash Flow

↑ Burn rate improving

Company generates more cash than it spends — no dilution risk from fundraising

Growth context

Merck & Co. is growing revenue at 5% year-over-year. The Winston Score measures business quality today — these growth metrics show what could matter tomorrow.

The Winston Score above measures business quality today. Growth stocks often score lower because they invest in the future rather than maximising current profits. These metrics show what matters most for evaluating that future.

Score breakdown

Every number that matters to educated investors.

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Quality

Gross Margin

92.7%

Premium pricing power — 92.7% gross margin

Operating Margin

53.3%

Excellent — 53.3% operating margin

ROCE

8.5%

Below par — 8.5% return on capital

ROIC between 5% and 15%. They earn 5 to 15 cents back per year on every dollar invested.

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Growth

Sales YoY

+1.3%

Nearly flat sales (1.3% YoY)

EPS YoY

+8.0%

Modest earnings growth (8.0% YoY)

Single-digit earnings growth — steady but not exciting.

EPS Consistency

4/8 quarters

Earnings inconsistent quarter-to-quarter

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Cash Flow

Cash Conversion

90%

Modest — 90% of profit becomes cash

FCF Margin

19.0%

Converts sales into free cash efficiently (19.0%)

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

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Stability

Debt / Equity

0.94

Moderate — manageable debt (0.94)

Interest Cover

28.34x

Comfortably covers interest (28.3x)

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

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Valuation

P/E Ratio (TTM)

17.5x

Fair value — P/E 17.5

P/E in the normal range. Price is roughly $15 for every $1 of yearly profit.

P/E vs Forward

+5.5

GROWING

Earnings expected to grow meaningfully — cheaper on forward P/E (17.5 → 12.0)

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Dividends

Dividend Yield

2.62%

Moderate income — 2.62% yield

Standard yield zone for stable dividend payers. A meaningful piece of total return.

Dividend Growth

+5.0%

Dividend growing modestly (5.0% YoY)

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