Highly Regarded

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

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

38% Discount TTM fundamentals · sector averages from covered peers

MRK trades at 19.2× TTM earnings — a 38% discount to its Healthcare sector average of 31.0× in our coverage.

The Numbers

P/E (TTM)

19.2×

Sector avg: 31.0×

P/S (TTM)

5.6×

Sector avg: 7.2×

Market Cap

$360.64B

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 $145.30 19.2×
LLY $1252.00 61.3×
JNJ $253.35 24.5×
UNH $406.67 21.2×
PFE $29.43 17.1×

Is the Discount Justified?

October 11, 2026

Merck & Co. Inc. trades at a P/E ratio of 19.2x, representing a discount to the healthcare sector average of 27.7x. This valuation is largely influenced by the impending patent expiry of its blockbuster oncology drug, Keytruda, with core U.S. patents set to expire between 2028 and 2029. While Keytruda continues to drive significant revenue, concerns about potential biosimilar competition and the need to offset future revenue declines are pressuring the multiple. Merck is actively addressing this "patent cliff" through strategic acquisitions, bolstering its oncology pipeline, and advancing new drug candidates to ensure long-term growth beyond Keytruda.

Sources

Frequently Asked Questions

Is MRK overvalued or undervalued?
On trailing-twelve-month earnings, MRK trades at 19.2x versus a Healthcare sector average of 31.0x in our coverage — a 38.1% 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

ABBV PFE UNH LLY JNJ