Merck & Co., Inc. (MRK) Stock Valuation — PE Analysis
Drug Manufacturers - General · NYSE
Current Price
$119.05
PE Ratio (TTM)
32.9x
Intrinsic Value
$97.25
-22.4% margin of safety
COMPETITIVE MOAT
↑Keytruda Dominance
Keytruda remains a cornerstone of Merck's revenue, demonstrating significant market penetration and efficacy in oncology. Its continued success provides a substantial and durable competitive advantage.
↑Strong R&D Pipeline
Merck's commitment to research and development fuels a robust pipeline of innovative therapies. This ongoing investment is crucial for future growth and maintaining market leadership in a dynamic industry.
↑Global Distribution Network
The company possesses an extensive global infrastructure for drug development, manufacturing, and distribution. This allows Merck to effectively reach diverse patient populations worldwide.
INVESTMENT RISKS
↓Keytruda Patent Expirations
The eventual expiration of Keytruda's patents poses a significant threat of generic competition. This could lead to substantial revenue erosion and impact future profitability.
↓Regulatory Hurdles
Drug development is subject to stringent regulatory approvals, which can be lengthy and uncertain. Failure to gain approval for new drugs or facing unexpected regulatory challenges can derail growth plans.
↓Intense Competition
The pharmaceutical industry is highly competitive, with numerous players vying for market share. Emerging therapies and aggressive strategies from rivals can challenge Merck's established positions.
Base case
MRK base case PE valuation
A base case PE valuation for MRK estimates a fair value of about $97.25 per share, against a current price of $119.05. The model assumes 2.2% annual earnings growth, a 33x target PE multiple, and a 10% discount rate.
Intrinsic Value
$97.25
Margin of safety
-22.4%
Expected annual return
-4.0%
Base case assumptions: 2.2% annual earnings growth, 33x target PE, 10% discount rate, 5 year projection. Data as of 2026-06-12.
This base case uses default assumptions and is not financial advice. The fair value changes significantly when the target PE or earnings growth rate changes. Open the calculator to set your own assumptions and see the full sensitivity range.
Customize the MRK PE valuation
Adjust the target PE, earnings growth, and discount rate to see how the fair value and margin of safety for Merck & Co., Inc. respond.
Open PE Calculator for MRKCompany Overview
Merck & Co., Inc. is a global healthcare leader with operations spanning two core divisions: Pharmaceuticals and Animal Health. The Pharmaceutical segment is dedicated to human health, offering a broad spectrum of medicinal products. These cover crucial therapeutic areas such as oncology, acute hospital care, immunology, neuroscience, virology, cardiovascular conditions, and diabetes. This division also develops vital preventive vaccines for pediatric, adolescent, and adult populations. Meanwhile, the Animal Health segment focuses on the research, development, manufacturing, and marketing of veterinary medications, vaccines, and comprehensive health management solutions for animals. This division further provides innovative digital products designed for animal identification, traceability, and continuous monitoring. Merck's extensive clientele encompasses drug wholesalers, pharmacies, hospitals, and government agencies. It also serves managed healthcare organizations, including health maintenance organizations (HMOs) and pharmacy benefit managers, as well as various other institutional clients. Additionally, the company supplies products to individual physicians and their distributors, veterinarians, and livestock producers. The organization actively engages in strategic collaborations with companies such as AstraZeneca PLC, Bayer AG, Eisai Co., Ltd., Ridgeback Biotherapeutics, and Gilead Sciences, Inc. These partnerships are specifically aimed at the joint development and commercialization of prolonged-acting therapies for HIV. Established in 1891, Merck & Co., Inc. maintains its corporate headquarters in Kenilworth, New Jersey.
Financial Metrics — MRK PE Stock Valuation Data
PE Ratio (TTM)
32.9x
PEG Ratio
n/m
Earnings Yield
3.04%
ROE (TTM)
17.9%
Revenue/Share (TTM)
$26.53
Dividend Yield
2.82%
Debt/Equity
1.07x
Frequently Asked Questions
What is the PE ratio of MRK?
The trailing twelve-month PE ratio of MRK reflects how much investors pay per dollar of Merck & Co., Inc.'s earnings. This metric is most useful when compared to Drug Manufacturers - General peers and the company's own historical range.
Is MRK overvalued based on PE ratio?
MRK's PE of 32.9x combined with a PEG ratio of -0.68 provides a growth-adjusted perspective. MRK has negative earnings, so its PE and PEG ratios are not meaningful here and cannot tell you whether the stock is over or undervalued. Keep in mind that PE-based valuation works best for profitable, mature companies — for high-growth or cyclical Drug Manufacturers - General, a DCF analysis may be more appropriate.
How do I value MRK stock using PE ratio?
To value Merck & Co., Inc. using PE: (1) Compare the current PE (32.9x) against the Drug Manufacturers - General median to assess relative pricing, (2) check the PEG ratio (-0.68) to adjust for growth expectations, (3) review the 5-year PE range to identify where the stock sits historically, and (4) estimate fair value by multiplying a target PE by forward EPS estimates. This relative approach complements DCF's absolute valuation.
What is the PEG ratio of MRK?
MRK's PEG ratio is -0.68, calculated by dividing the PE ratio (32.9x) by the expected earnings growth rate. Because MRK has negative earnings, its PEG ratio is not meaningful and should not be read as a sign of under or overvaluation. Note that PEG accuracy depends on the reliability of growth estimates.
Should I use PE ratio or DCF for MRK stock valuation?
PE ratio gives a quick relative read — how MRK is priced versus Drug Manufacturers - General peers. DCF provides an absolute value based on projected free cash flows. For MRK, with a strong ROE of 17.9%, both methods are worth using — PE for a market-relative check, DCF to stress-test whether fundamentals justify the price. Each method has blind spots: PE ignores capital structure and cash flow quality, while DCF is sensitive to growth and discount rate assumptions.
Learn More
- See MRK DCF Valuation → — Intrinsic value via Discounted Cash Flow analysis
- PE Methodology — Step-by-step guide to PE ratio stock valuation
- DCF Methodology — Guide to discounted cash flow analysis
- PE Ratio — Understanding the price-to-earnings ratio
- Intrinsic Value — How to evaluate stock fair value
Related PE Valuations
All Healthcare valuationsP/E and DCF value MRK with different methods and assumptions, so the two conclusions can differ. Compare the DCF intrinsic value.
Price as of 2026-06-12. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.