Revenue minus cost of goods sold. Graham's ≥40% threshold identifies businesses with durable pricing power. Note: software and financial companies naturally exceed this; retailers and manufacturers rarely reach it due to their cost structures.
Operating Margin-19.7%
Profit after operating costs before interest and taxes. A consistent ≥15% operating margin signals a business with real competitive advantages. Capital-intensive industries (airlines, auto, commodities) rarely hit this threshold due to their structural cost base — compare within industry for context.
Net Income Margin-26.0%
Bottom-line profit as a percentage of revenue. The ≥20% target reflects Buffett's preference for highly profitable businesses. Financial engineering (buybacks, tax optimisation) can inflate this temporarily — look for consistency across multiple years rather than a single strong result.
Financial Health
D
Years to Pay Off Debt-11.6 yrs
Total Debt ÷ Net Income. Lower = stronger balance sheet. Important caveat: utilities, telecoms, REITs, and infrastructure companies carry large structural debt by design — their bond-like cash flows service it comfortably at ratios that would alarm Graham. Compare within sector.
Working Capital vs Long-Term Debt-$38.6B
Working Capital minus Long-Term Debt. Negative results are common and expected in capital-return-focused businesses like Apple, Domino's, and McDonald's — where aggressive buybacks and dividends intentionally reduce book equity. This does not indicate financial distress in high-FCF businesses.
Working Capital$8.1B
Current Assets minus Current Liabilities. Negative working capital can be a deliberate efficiency strategy in businesses that collect cash before paying suppliers (retailers, fast food franchises, subscription businesses). Assess alongside free cash flow generation for full context.
Valuation
F
Price-to-Book6.13x
Market price vs book value per share. Rarely below 1.5x for quality businesses today. Intangible assets (brand, software, patents) don't appear on the balance sheet under accounting rules, making P/B artificially high for asset-light companies like software and consumer brands.
Cash Flow
C
Free Cash Flow$2.9B
Operating cash flow minus capital expenditures. Buffett's most important metric — cash a business actually generates for its owners after maintaining and growing its asset base. Consistently positive FCF is one of the strongest indicators of a durable, well-run business regardless of accounting profits.
Owner Earnings-$1.7B
Net Income + Depreciation & Amortisation − Capital Expenditures. Buffett's preferred measure of a company's true annual earning power — what could theoretically be distributed to owners without impairing the business. More reliable than reported EPS because it accounts for the capital cost of maintaining the business.
About Merck & Co., Inc.
Merck & Co., Inc. operates as a healthcare company worldwide. It offers human health pharmaceutical for various areas under the Keytruda, Keytruda Qlex, Welireg, Gardasil, ProQuad, M-M-R II, Varivax, Vaxneuvance, Capvaxive, RotaTeq, Pneumovax 23, Bridion, Prevymis, Dificid, Zerbaxa, Winrevair, Adempas/ Verquvo, Ohtuvayre, Lagevrio, Isentress/Isentress HD, Delstrigo, Pifeltro, Belsomra, Januvia, and Janumet brands. The company also provides veterinary pharmaceuticals, vaccines and health management solutions and services, such as livestock products under the Nuflor, Bovilis/Vista, Bovilis Cryptium, Banamine, Estrumate, Matrix, Resflor, Zuprevo, Revalor, Safe-Guard, M+Pac, Porcilis, Circumvent, Nobilis/Innovax, Paracox and Coccivac, Exzolt, Slice, Imvixa, Clynav, Aquavac/Norvax, Aquaflor, Flexolt brands; Allflex Livestock Intelligence solutions; and companion animal products under the Bravecto One-Month, Bravecto Injectable/Quantum, Bravecto TriUNO, Bravecto Plus, Sentinel Spectrum, Sentinel Flavor Tabs, Numelvi, Optimmune, Nobivac NXT, GilvetMab, Otomax, Mometamax, Mometamax Ultra, Posatex, Caninsulin/Vetsulin, Panacur, Safeguard, Regumate, Prestige, Scalibor/Exspot, Sure Petcare, and Home Again brands. It has development and commercialization agreement for three of Daiichi Sankyo's deruxtecan ADC candidates; AstraZeneca PLC to co-development and co-commercialize AstraZeneca's Lynparza products for multiple cancer types; licensed to develop, manufacture and commercialize LM-299, a novel investigational PD-1/VEGF bispecific antibody from LaNova; and collaboration agreement with Eisai Co., Ltd., Bayer AG, and Ridgeback Biotherapeutics LP, as well Moderna, Inc. Merck & Co., Inc. has strategic collaboration with Infinimmune, Inc. to discover and develop antibodies against multiple therapeutic targets. The company was founded in 1891 and is headquartered in Rahway, New Jersey.
Merck & Co., Inc. operates as a healthcare company worldwide. It offers human health pharmaceutical for various areas under the Keytruda, Keytruda Qlex, Welireg, Gardasil, ProQuad, M-M-R II, Varivax, Vaxneuvance, Capvaxive, RotaTeq, Pneumovax 23, Bridion, Prevymis, Dificid, Zerbaxa, Winrevair, Adempas/ Verquvo, Ohtuvayre, Lagevrio, Isentress/Isentress HD, Delstrigo, Pifeltro, Belsomra, Januvia, and Janumet brands. The company also provides veterinary pharmaceuticals, vaccines and health management solutions and services, such as livestock products under the Nuflor, Bovilis/Vista, Bovilis Cryptium, Banamine, Estrumate, Matrix, Resflor, Zuprevo, Revalor, Safe-Guard, M+Pac, Porcilis, Circumvent, Nobilis/Innovax, Paracox and Coccivac, Exzolt, Slice, Imvixa, Clynav, Aquavac/Norvax, Aquaflor, Flexolt brands; Allflex Livestock Intelligence solutions; and companion animal products under the Bravecto One-Month, Bravecto Injectable/Quantum, Bravecto TriUNO, Bravecto Plus, Sentinel Spectrum, Sentinel Flavor Tabs, Numelvi, Optimmune, Nobivac NXT, GilvetMab, Otomax, Mometamax, Mometamax Ultra, Posatex, Caninsulin/Vetsulin, Panacur, Safeguard, Regumate, Prestige, Scalibor/Exspot, Sure Petcare, and Home Again brands. It has development and commercialization agreement for three of Daiichi Sankyo's deruxtecan ADC candidates; AstraZeneca PLC to co-development and co-commercialize AstraZeneca's Lynparza products for multiple cancer types; licensed to develop, manufacture and commercialize LM-299, a novel investigational PD-1/VEGF bispecific antibody from LaNova; and collaboration agreement with Eisai Co., Ltd., Bayer AG, and Ridgeback Biotherapeutics LP, as well Moderna, Inc. Merck & Co., Inc. has strategic collaboration with Infinimmune, Inc. to discover and develop antibodies against multiple therapeutic targets. The company was founded in 1891 and is headquartered in Rahway, New Jersey.
Metric Explanations
What each dimension measures and where the thresholds come from.
Gross Profit Margin
Revenue minus cost of goods sold. Graham's ≥40% threshold identifies businesses with durable pricing power. Note: software and financial companies naturally exceed this; retailers and manufacturers rarely reach it due to their cost structures.
Operating Margin
Profit after operating costs before interest and taxes. A consistent ≥15% operating margin signals a business with real competitive advantages. Capital-intensive industries (airlines, auto, commodities) rarely hit this threshold due to their structural cost base — compare within industry for context.
Net Income Margin
Bottom-line profit as a percentage of revenue. The ≥20% target reflects Buffett's preference for highly profitable businesses. Financial engineering (buybacks, tax optimisation) can inflate this temporarily — look for consistency across multiple years rather than a single strong result.
Years to Pay Off Debt
Total Debt ÷ Net Income. Lower = stronger balance sheet. Important caveat: utilities, telecoms, REITs, and infrastructure companies carry large structural debt by design — their bond-like cash flows service it comfortably at ratios that would alarm Graham. Compare within sector.
Working Capital vs Long-Term Debt
Working Capital minus Long-Term Debt. Negative results are common and expected in capital-return-focused businesses like Apple, Domino's, and McDonald's — where aggressive buybacks and dividends intentionally reduce book equity. This does not indicate financial distress in high-FCF businesses.
Working Capital
Current Assets minus Current Liabilities. Negative working capital can be a deliberate efficiency strategy in businesses that collect cash before paying suppliers (retailers, fast food franchises, subscription businesses). Assess alongside free cash flow generation for full context.
Price-to-Book
Market price vs book value per share. Rarely below 1.5x for quality businesses today. Intangible assets (brand, software, patents) don't appear on the balance sheet under accounting rules, making P/B artificially high for asset-light companies like software and consumer brands.
Free Cash Flow
Operating cash flow minus capital expenditures. Buffett's most important metric — cash a business actually generates for its owners after maintaining and growing its asset base. Consistently positive FCF is one of the strongest indicators of a durable, well-run business regardless of accounting profits.
Owner Earnings
Net Income + Depreciation & Amortisation − Capital Expenditures. Buffett's preferred measure of a company's true annual earning power — what could theoretically be distributed to owners without impairing the business. More reliable than reported EPS because it accounts for the capital cost of maintaining the business.
Net Income From Continuing Operation Net Minority Interest
-4,240,000
2,963,000
Reconciled Depreciation
1,512,000
2,466,000
Reconciled Cost Of Revenue
4,195,000
5,551,000
EBITDA
-1,543,000
6,297,000
EBIT
-3,055,000
3,831,000
Net Interest Income
-444,000
-342,000
Interest Expense
479,000
411,000
Interest Income
35,000
69,000
Normalized Income
-4,201,000
3,402,104
Net Income From Continuing And Discontinued Operation
-4,240,000
2,963,000
Total Expenses
19,487,000
12,335,000
Diluted Average Shares
2,472,000
2,488,000
Basic Average Shares
2,469,693
2,474,627
Diluted EPS
0
0
Basic EPS
0
0
Diluted NI Availto Com Stockholders
-4,240,000
2,963,000
Net Income Common Stockholders
-4,240,000
2,963,000
Net Income
-4,240,000
2,963,000
Minority Interests
3,000
1,000
Net Income Including Noncontrolling Interests
-4,243,000
2,962,000
Net Income Continuous Operations
-4,243,000
2,962,000
Tax Provision
709,000
458,000
Pretax Income
-3,534,000
3,420,000
Other Income Expense
111,000
-303,000
Other Non Operating Income Expenses
176,000
204,000
Special Income Charges
-195,000
-213,000
Restructuring And Mergern Acquisition
195,000
213,000
Gain On Sale Of Security
130,000
-294,000
-205,000
Net Non Operating Interest Income Expense
-444,000
-342,000
Interest Expense Non Operating
479,000
411,000
Interest Income Non Operating
35,000
69,000
Operating Income
-3,201,000
4,065,000
Operating Expense
15,292,000
6,784,000
Research And Development
12,592,000
3,886,000
Selling General And Administration
2,700,000
2,898,000
Gross Profit
12,091,000
10,849,000
Cost Of Revenue
4,195,000
5,551,000
Total Revenue
16,286,000
16,400,000
Operating Revenue
16,286,000
16,400,000
Balance Sheet
2026
2025
2024
Treasury Shares Number
1,107,410
1,102,477
Ordinary Shares Number
2,469,693
2,474,627
Share Issued
3,577,104
3,577,104
Net Debt
43,790,000
34,774,000
Total Debt
49,117,000
49,339,000
Tangible Book Value
-1,448,000
4,346,000
Invested Capital
94,995,000
101,945,000
Working Capital
8,070,000
15,189,000
Net Tangible Assets
-1,448,000
4,346,000
Common Stock Equity
45,878,000
52,606,000
Total Capitalization
92,551,000
99,356,000
Total Equity Gross Minority Interest
45,931,000
52,662,000
Minority Interest
53,000
56,000
Stockholders Equity
45,878,000
52,606,000
Gains Losses Not Affecting Retained Earnings
-4,060,000
-4,287,000
Other Equity Adjustments
-4,060,000
-4,287,000
Treasury Stock
63,747,000
62,999,000
Retained Earnings
66,721,000
73,075,000
Additional Paid In Capital
45,176,000
45,029,000
Capital Stock
1,788,000
1,788,000
Common Stock
1,788,000
1,788,000
Total Liabilities Net Minority Interest
82,754,000
84,204,000
Total Non Current Liabilities Net Minority Interest
55,809,000
55,877,000
Other Non Current Liabilities
7,642,000
7,688,000
Non Current Deferred Liabilities
1,494,000
1,439,000
Non Current Deferred Taxes Liabilities
1,494,000
1,439,000
Long Term Debt And Capital Lease Obligation
46,673,000
46,750,000
Long Term Debt
46,673,000
46,750,000
Current Liabilities
26,945,000
28,327,000
Current Debt And Capital Lease Obligation
2,444,000
2,589,000
Current Debt
2,444,000
2,589,000
Payables And Accrued Expenses
24,501,000
25,738,000
Current Accrued Expenses
14,549,000
14,468,000
Payables
9,952,000
11,270,000
Dividends Payable
2,143,000
2,140,000
Total Tax Payable
3,946,000
4,726,000
Income Tax Payable
3,946,000
4,726,000
Accounts Payable
3,863,000
4,404,000
Total Assets
128,685,000
136,866,000
Total Non Current Assets
93,670,000
93,350,000
Other Non Current Assets
19,806,000
18,818,000
Investments And Advances
1,105,000
956,000
Investmentin Financial Assets
956,000
463,000
Available For Sale Securities
956,000
463,000
Trading Securities
463,000
Goodwill And Other Intangible Assets
47,326,000
48,260,000
Other Intangible Assets
25,745,000
26,681,000
Goodwill
21,581,000
21,579,000
Net PPE
25,433,000
25,316,000
Accumulated Depreciation
-22,288,000
-21,914,000
Gross PPE
47,721,000
47,230,000
Construction In Progress
9,166,000
7,984,000
Machinery Furniture Equipment
19,760,000
18,283,000
Buildings And Improvements
17,983,000
16,360,000
Land And Improvements
321,000
307,000
Current Assets
35,015,000
43,516,000
Other Current Assets
10,624,000
10,518,000
Inventory
6,479,000
6,658,000
Inventories Adjustments Allowances
Finished Goods
Raw Materials
Receivables
12,210,000
11,775,000
Accounts Receivable
12,210,000
11,775,000
Allowance For Doubtful Accounts Receivable
-103,000
-97,000
Gross Accounts Receivable
12,313,000
11,872,000
Cash Cash Equivalents And Short Term Investments
5,702,000
14,565,000
Other Short Term Investments
375,000
0
Cash And Cash Equivalents
5,327,000
14,565,000
Cash Flow
2026
2025
2024
Free Cash Flow
2,927,000
1,824,000
Repurchase Of Capital Stock
-874,000
-1,252,000
Repayment Of Debt
-1,140,000
-2,000
Issuance Of Debt
7,918,000
0
Capital Expenditure
-991,000
-1,033,000
End Cash Position
5,398,000
14,690,000
Beginning Cash Position
14,690,000
18,260,000
Effect Of Exchange Rate Changes
-19,000
23,000
Changes In Cash
-9,273,000
-3,593,000
Financing Cash Flow
-2,981,000
4,751,000
Cash Flow From Continuing Financing Activities
-2,981,000
4,751,000
Net Other Financing Charges
-80,000
121,000
Proceeds From Stock Option Exercised
157,000
47,000
Cash Dividends Paid
-2,105,000
-2,018,000
Common Stock Dividend Paid
-2,105,000
-2,018,000
Net Common Stock Issuance
-874,000
-1,252,000
Common Stock Payments
-874,000
-1,252,000
Net Issuance Payments Of Debt
-79,000
7,853,000
Net Short Term Debt Issuance
1,061,000
Net Long Term Debt Issuance
-1,140,000
7,916,000
Long Term Debt Payments
-1,140,000
-2,000
Long Term Debt Issuance
7,918,000
0
Investing Cash Flow
-10,210,000
-11,201,000
Cash Flow From Continuing Investing Activities
-10,210,000
-11,201,000
Net Other Investing Changes
-66,000
-172,000
Net Investment Purchase And Sale
-374,000
46,000
Sale Of Investment
0
46,000
Purchase Of Investment
-374,000
0
Net Business Purchase And Sale
-8,779,000
-10,042,000
Purchase Of Business
-8,779,000
-10,042,000
Capital Expenditure Reported
-991,000
-1,033,000
Operating Cash Flow
3,918,000
2,857,000
Cash Flow From Continuing Operating Activities
3,918,000
2,857,000
Change In Working Capital
-1,613,000
-2,319,000
Other Non Cash Items
8,560,000
118,000
Stock Based Compensation
185,000
205,000
Deferred Tax
-315,000
-825,000
Deferred Income Tax
-315,000
-825,000
Depreciation Amortization Depletion
1,512,000
2,466,000
Depreciation And Amortization
1,512,000
2,466,000
Amortization Cash Flow
931,000
973,000
Amortization Of Intangibles
931,000
973,000
Depreciation
581,000
1,493,000
Operating Gains Losses
-168,000
195,000
Gain Loss On Investment Securities
-168,000
195,000
Net Income From Continuing Operations
-4,243,000
2,962,000
📊Quarterly mode — Graham Fair Value & 7 Criteria require annual data. Switch to Annual for full analysis.
Quarter vs Same Quarter Last Year
YoY strips seasonality
Revenue Growth (YoY)
Prior year: $15.5B▲ $16.3B+4.9%
Revenue growth vs same quarter last year strips seasonality. Consistent double-digit growth is a Buffett hallmark.
Gross Margin
Prior year: 78.0%▼ 74.2%-3.7pp
Buffett: consistent gross margin above 40% signals durable pricing power and competitive moat.
Operating Margin
Prior year: -20.6%▼ -19.7%+1.0pp
Graham: operating margin reflects true business economics before financing. Trend matters as much as level.
Net Margin
Prior year: 32.7%▼ -26.0%-58.7pp
Net margin can be distorted by one-time items, tax timing, or interest costs — compare to operating margin for signal quality.
Quarterly Health Checks
3 Graham/Buffett criteria that are valid and reliable on quarterly data
✅ Adequate Size
Graham required scale for resilience. Quarterly revenue × 4 gives an annualised proxy.
$16.3B/qtr (≈$65.1B ann.)
vs > $1.5B annualised revenue
❌ Financial Condition
Current assets vs current liabilities — a real-time liquidity snapshot. Valid and reliable on quarterly data.
1.30x current ratio
vs ≥ 2.0x
✅ Free Cash Flow
Buffett's most important single metric. A positive FCF quarter means the business generated real cash for owners after maintaining its asset base.
$2.9B
vs Positive
Operating Cash Flow
$3.9B
Latest quarter · Buffett's cash reality check
ROIC
-2.5%
Based on latest annual operating income
Return on Invested Capital — Buffett's preferred measure for asset-light businesses. ROIC > 15% consistently signals a durable competitive advantage (moat). More meaningful than P/B for software, pharma, and consumer brand companies where most value is intangible and off-balance-sheet.
Market Cap / Net Assets
6.1x
Net Assets: $45.9B
⚠️Net margin compressed 58.7pp vs same quarter last year. Common causes: one-time charges (restructuring, write-downs, legal settlements), tax rate changes, or rising interest expense. Check the income statement notes before drawing conclusions about operating health.
Peers & Industry
No auto-detected peers for Drug Manufacturers - General. You can manually compare MRK against any stock using the Compare tool.
"The management of a business is its most important single factor — more important than market position, patents, or financial structure."
— Benjamin Graham
Capital Allocation & Alignment
Insider Ownership
0.06%
Low — management has little skin in the game
Return on Equity (ROE)
-9.2%
Weak — poor returns on equity
Return on Assets (ROA)
-3.3%
Poor — assets are not generating adequate returns
Share Buybacks (Latest Year)
$5.1B
Management is returning capital to shareholders via buybacks
Debt Trend YoY
-0.4% YoY
Debt is declining — management is deleveraging
Leadership Team
Robert Davis
Chairman, President & CEO
Age 58
Pay: $4,629,860
Caroline Litchfield
Executive VP & CFO
Age 56
Pay: $2,400,632
Dean Li , Ph.
Executive VP & President of Merck Research Laboratories
Age 62
Pay: $2,997,187
Peter Dannenbaum
Vice President of Investor Relations
Chirfi Guindo
Executive Vice President of Strategic Access, Policy & Communications
Age 59
Pay: $1,541,708
Top Institutional Holders
Institution
% Owned
Shares
Blackrock Inc.
9.14%
225,830,330
Vanguard Capital Management LLC
6.52%
160,987,624
State Street Corporation
4.83%
119,325,673
Wellington Management Group, LLP
3.41%
84,314,971
Vanguard Portfolio Management LLC
2.73%
67,304,305
Geode Capital Management, LLC
2.41%
59,558,154
JPMORGAN CHASE & CO
2.14%
52,972,983
Charles Schwab Investment Management, Inc.
2.01%
49,765,225
Risk Analysis
Beta (Market Risk)
0.22
Low volatility — more stable than the market
Short Interest
1.2% of float
Low short interest — market is not heavily bearish
Debt-to-Equity
1.07x
Moderate leverage
Current Ratio
1.30x
Adequate liquidity
52-Week Price Range
Low: $76.66Current: $113.87High: $125.14
Currently at 77% of 52-week range
Merck & Co., Inc. (MRK) fundamental analysis — Overall grade F based on profitability, financial health, valuation and cash flow. Graham's
Fair Value: N/A (negative EPS). Gross profit margin: 74.2%. Operating margin: -19.7%. Net margin: -26.0%. Market cap: $281.2B. Sector: Healthcare. Industry: Drug Manufacturers - General. Analysis powered by 360investing — free fundamental stock analysis based on Benjamin Graham and Warren Buffett
principles.
Disclaimer: 360investing is provided for informational and educational purposes only and does not constitute financial, investment, legal, or tax advice. All data is sourced from public third-party providers
and may be delayed, inaccurate, or incomplete. Past performance is not indicative of future results. Analysis, scores, and valuations are algorithmic and do not represent professional investment recommendations. Always conduct your own due
diligence and consult a qualified financial adviser before making any investment decision. Use of this tool constitutes acceptance that 360investing and its operators bear no liability for decisions made based on information presented here.