Analyzing Merck & Co In Comparison To Competitors In Pharmaceuticals Industry

In today's rapidly changing and highly competitive business world, it is vital for investors and industry enthusiasts to carefully assess companies. In this article, we will perform a comprehensive industry comparison, evaluating Merck & Co MRK against its key competitors in the Pharmaceuticals industry. By analyzing important financial metrics, market position, and growth prospects, we aim to provide valuable insights for investors and shed light on company's performance within the industry.

Merck & Co Background

Merck makes pharmaceutical products to treat several conditions in a number of therapeutic areas, including cardiometabolic disease, cancer, and infections. Within cancer, the firm's immuno-oncology platform is growing as a major contributor to overall sales. The company also has a substantial vaccine business, with treatments to prevent pediatric diseases as well as human papillomavirus, or HPV. Additionally, Merck sells animal health-related drugs. From a geographical perspective, just under half of the company's sales are generated in the United States.

Company P/E P/B P/S ROE EBITDA (in billions) Gross Profit (in billions) Revenue Growth
Merck & Co Inc 921.64 8.70 5.47 -3.11% $-0.77 $10.72 5.78%
Eli Lilly and Co 131.90 67.48 20.25 19.91% $3.03 $7.57 28.1%
Novo Nordisk A/S 45.23 35.27 16.30 22.01% $28.51 $55.85 36.95%
Johnson & Johnson 30.96 5.64 4.84 5.78% $6.82 $14.6 7.3%
Novartis AG 25.16 4.52 4.62 19.99% $4.18 $8.75 7.39%
AstraZeneca PLC 34.82 5.25 4.52 2.52% $2.18 $9.72 7.29%
Pfizer Inc 72.68 1.71 2.59 -3.62% $-1.77 $6.69 -41.34%
Sanofi SA 20.73 1.50 2.41 -0.75% $0.42 $8.15 6.5%
Bristol-Myers Squibb Co 13.09 3.47 2.33 6.03% $4.45 $8.73 0.62%
Zoetis Inc 39.25 18.23 10.77 10.42% $0.83 $1.49 8.48%
GSK PLC 13.95 5.08 2.27 2.64% $1.78 $5.63 -1.17%
Takeda Pharmaceutical Co Ltd 39.72 1.04 1.69 -0.69% $202.28 $699.51 4.07%
Viatris Inc 8.76 0.76 1.03 1.59% $1.22 $1.69 -3.34%
Dr Reddy's Laboratories Ltd 20.33 3.96 3.91 5.29% $22.42 $42.2 6.57%
Jazz Pharmaceuticals PLC 159.39 2.39 2.43 4.19% $0.33 $0.87 3.35%
Average 46.86 11.16 5.71 6.81% $19.76 $62.25 5.05%

After examining Merck & Co, the following trends can be inferred:

  • Notably, the current Price to Earnings ratio for this stock, 921.64, is 19.67x above the industry norm, reflecting a higher valuation relative to the industry.

  • Considering a Price to Book ratio of 8.7, which is well below the industry average by 0.78x, the stock may be undervalued based on its book value compared to its peers.

  • Based on its sales performance, the stock could be deemed undervalued with a Price to Sales ratio of 5.47, which is 0.96x the industry average.

  • With a Return on Equity (ROE) of -3.11% that is 9.92% below the industry average, it appears that the company exhibits potential inefficiency in utilizing equity to generate profits.

  • With lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $-770 Million, which is -0.04x below the industry average, the company may face lower profitability or financial challenges.

  • The gross profit of $10.72 Billion is 0.17x below that of its industry, suggesting potential lower revenue after accounting for production costs.

  • The company's revenue growth of 5.78% exceeds the industry average of 5.05%, indicating strong sales performance and market outperformance.

Debt To Equity Ratio

The debt-to-equity (D/E) ratio provides insights into the proportion of debt a company has in relation to its equity and asset value.

Considering the debt-to-equity ratio in industry comparisons allows for a concise evaluation of a company's financial health and risk profile, aiding in informed decision-making.

When evaluating Merck & Co alongside its top 4 peers in terms of the Debt-to-Equity ratio, the following insights arise:

  • Compared to its top 4 peers, Merck & Co has a stronger financial position indicated by its lower debt-to-equity ratio of 0.93.

  • This suggests that the company relies less on debt financing and has a more favorable balance between debt and equity, which can be seen as a positive attribute by investors.

Key Takeaways

For Merck & Co in the Pharmaceuticals industry, the PE ratio is high compared to peers, indicating potentially overvalued stock. The PB and PS ratios are low, suggesting undervaluation relative to industry standards. In terms of ROE, EBITDA, and gross profit, Merck & Co lags behind its competitors, reflecting lower profitability and operational efficiency. However, the high revenue growth rate indicates strong potential for future performance compared to industry peers.

This article was generated by Benzinga's automated content engine and reviewed by an editor.

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