Highly Regarded

Is Merck & Co. Inc. (MRK) Stock Undervalued or Overvalued?

Trailing-twelve-month multiples vs Healthcare sector peers in our coverage

44% Discount TTM fundamentals · sector averages from covered peers

MRK trades at 16.8× TTM earnings — a 44% discount to its Healthcare sector average of 29.8× in our coverage.

The Numbers

P/E (TTM)

16.8×

Sector avg: 29.8×

P/S (TTM)

4.9×

Sector avg: 7.0×

Market Cap

$314.75B

EPS (TTM): $7.57

Revenue (TTM)

$64.23B

Net income: $19.04B

Healthcare Peer Comparison

How MRK's multiples stack up against sector peers we cover. Click any peer for its own valuation breakdown.

Stock Price P/E (TTM)
MRK This page $126.81 16.8×
LLY $1201.42 58.8×
JNJ $259.33 25.0×
UNH $418.05 21.8×
PFE $23.74 13.8×

Is the Discount Justified?

July 6, 2026

Merck's P/E ratio of 16.7x, a notable discount to the healthcare sector average of 27.2x, is primarily influenced by the impending patent expiration of its top-selling cancer drug, Keytruda, in late 2028. Keytruda has been a significant revenue driver, accounting for nearly half of the company's total sales. To mitigate this "patent cliff," Merck is aggressively expanding its pipeline through strategic acquisitions and developing new formulations, such as a subcutaneous Keytruda, which could extend its market exclusivity. The company projects new growth drivers to generate over $70 billion in annual revenue by the mid-2030s. The current valuation reflects market concerns about the revenue gap post-Keytruda, despite proactive diversification efforts.

Sources

Frequently Asked Questions

Is MRK overvalued or undervalued?
On trailing-twelve-month earnings, MRK trades at 16.8x versus a Healthcare sector average of 29.8x in our coverage — a 43.9% discount. Whether that's justified depends on growth, margins, and risk; see the context above.
What does the P/E ratio tell you?
Price-to-earnings compares a company's share price with its per-share profits. A higher multiple means investors pay more per dollar of earnings — often for faster expected growth — while a lower one can signal slower growth or higher perceived risk.
Why compare against the sector average?
Valuation multiples vary structurally between industries — software typically trades richer than banks or energy. Comparing MRK with its own Healthcare peers is more informative than comparing against the whole market.
Is a cheap stock automatically a good buy?
No. A discount can be justified by weak growth or elevated risk (a "value trap"), and a premium can be earned by quality and consistency. Valuation is one input — pair it with the fundamentals and the AI context on this page.

Methodology

Multiples are computed from trailing-twelve-month fundamentals (from company filings) and the latest share price: P/E is price ÷ diluted EPS, and P/S is market cap ÷ revenue. Sector averages use the Healthcare names in our 50-stock coverage with positive earnings — a deliberately like-for-like, if imperfect, benchmark.

Stocks with negative trailing earnings are compared on price-to-sales instead. Multiples update with prices and fundamentals; AI context refreshes weekly.

Not Financial Advice

This page is for education and information only. Indicators are mechanical calculations, AI commentary can contain errors, and nothing here is a recommendation to buy or sell any security. Do your own research and consider consulting a qualified financial advisor. See our full disclaimer.

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Same question, Healthcare peers

JNJ ABBV PFE UNH LLY