As of February 10, 2026, Merck & Co Inc's estimated intrinsic value ranges from $106.72 to $171.50 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $171.50 | +45.8% |
| Discounted Cash Flow (5Y) | $144.74 | +23.0% |
| Dividend Discount Model (Multi-Stage) | $120.49 | +2.4% |
| Dividend Discount Model (Stable) | $123.62 | +5.1% |
| Earnings Power Value | $106.72 | -9.3% |
Is Merck & Co Inc (MRK) undervalued or overvalued?
With the current market price at $117.65, the stock appears to be moderately undervalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Merck & Co Inc's intrinsic value, including:
The cost of capital is a critical factor in valuation models, representing the required return for investors.
| WACC Component | Low | High |
|---|---|---|
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.61 | 0.68 |
| Cost of equity | 6.7% | 8.7% |
| Cost of debt | 4.0% | 4.5% |
| Tax rate | 12.7% | 13.6% |
| Debt/Equity ratio | 0.12 | 0.12 |
| After-tax WACC | 6.3% | 8.1% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $145 | $382,451M | 77.5% |
| 10-Year Growth | $172 | $448,877M | 62.7% |
| 5-Year EBITDA | $98 | $267,314M | 67.8% |
| 10-Year EBITDA | $127 | $338,827M | 50.6% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $20,513M |
| Discount Rate (WACC) | 8.1% - 6.3% |
| Enterprise Value | $252,070M - $324,101M |
| Net Debt | $23,205M |
| Equity Value | $228,865M - $300,896M |
| Outstanding Shares | 2,482M |
| Fair Value | $92 - $121 |
| Selected Fair Value | $106.72 |
| Metric | Value |
|---|---|
| Market Capitalization | $292010M |
| Enterprise Value | $315215M |
| Trailing P/E | 16.00 |
| Forward P/E | 15.26 |
| Trailing EV/EBITDA | 8.20 |
| Current Dividend Yield | 267.95% |
| Dividend Growth Rate (5Y) | 5.98% |
| Debt-to-Equity Ratio | 0.12 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 30% | $51.45 |
| Discounted Cash Flow (5Y) | 25% | $36.18 |
| Dividend Discount Model (Multi-Stage) | 20% | $24.10 |
| Dividend Discount Model (Stable) | 15% | $18.54 |
| Earnings Power Value | 10% | $10.67 |
| Weighted Average | 100% | $140.95 |
Based on our comprehensive valuation analysis, Merck & Co Inc's intrinsic value is $140.95, which is approximately 19.8% above the current market price of $117.65.
Key investment considerations:
Given these factors, we believe Merck & Co Inc is currently moderately undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.