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Merck & Co.

MRK
42
Drug Manufacturers - General · Healthcare
Also trades as: 0QAH.L GBP 1.46 (-0.98%)
Price
$145.97
+0.78 (+0.53%)
Market Cap
$360.12B
Winston Score
42
Winston is serious
Mixed quality — meaningful strengths and weaknesses.
Data as of Oct 18, 2026 · filings through Jun 30, 2026

§How the score breaks down

Quality
Mixed
13/30
Growth
Weak
4/20
Cash Flow
Exceptional
10/10
Stability
Good
6/10
Valuation
Good
5/10
Ownership
Weak
1/15
Dividends
Good
3/5

42 of 100 counted points = Winston Score 42.

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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)

§Winston Score History

The full picture

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.

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Growth Profile

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

Revenue Growth

+5.1% YoY

YoY Growth Rate

Slow revenue growth

EPS Growth

-130.7% 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

Insider ownership roughly steady over the past year

Cash Position

Cash flow positive

$8.4B 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.

Each metric is explained in plain language so you know exactly what you're looking at. Start your free trial now.

Quality

Profit per sale
Gross Margin
73.5%
Premium pricing power — 73.5% gross margin
Profit after running costs
Operating Margin
-4.1%
Losing money on operations — -4.1%
Return on the money invested
ROCE
11.5%
Below par — 11.5% 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 growth
Sales YoY
+4.2%
Slow sales growth (+4.2% YoY)
Profit growth
EPS YoY
-80.6%
Earnings shrinking (-80.6% YoY)

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

How steady the profit is
EPS Consistency
3/8 quarters
Earnings rarely grow — volatile business

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Cash Flow

Profit that turns into cash
Cash Conversion
629%
Turns 629% of profit into real cash
Spare cash per sale
FCF Margin
24.2%
Converts sales into free cash efficiently (24.2%)

Free cash flow margin above 20%. Out of every $100 in sales, more than $20 is real cash they keep.

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Stability

What it owes vs what it owns
Debt / Equity
1.29
Elevated debt (1.29)
Covers its interest
Interest Cover
8.75x
Comfortably covers interest (8.8x)

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

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Valuation

Price vs profit
P/E Ratio (TTM)
115.8x
Expensive — P/E 115.8

P/E over 35. The market is pricing in heavy, sustained growth.

Cheaper or dearer next year
P/E vs Forward
+101.5
GROWING
Earnings expected to grow meaningfully — cheaper on forward P/E (115.8 → 14.4)

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Dividends

Dividend
Dividend Yield
2.29%
Moderate income — 2.29% yield

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

Dividend record
Dividend Growth
+4.9%
Dividend growing modestly (4.9% YoY)
Payout Ratio
262%
no trend
Paying out more than the last 12 months of profit. The dividend is being funded from cash or borrowing, not this year’s earnings.

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