As of April 3, 2026, Merck & Co Inc's estimated intrinsic value ranges from $104.76 to $166.25 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $166.25 | +37.5% |
| Discounted Cash Flow (5Y) | $139.71 | +15.6% |
| Dividend Discount Model (Multi-Stage) | $116.79 | -3.4% |
| Dividend Discount Model (Stable) | $118.36 | -2.1% |
| Earnings Power Value | $104.76 | -13.3% |
Is Merck & Co Inc (MRK) undervalued or overvalued?
With the current market price at $120.87, 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 | 0.66 | 0.71 |
| Cost of equity | 6.9% | 8.8% |
| Cost of debt | 4.0% | 4.5% |
| Tax rate | 12.7% | 13.6% |
| Debt/Equity ratio | 0.17 | 0.17 |
| After-tax WACC | 6.4% | 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 | $140 | $380,194M | 77.2% |
| 10-Year Growth | $166 | $445,811M | 62.4% |
| 5-Year EBITDA | $93 | $265,475M | 67.3% |
| 10-Year EBITDA | $122 | $336,014M | 50.1% |
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 | $21,046M |
| Discount Rate (WACC) | 8.1% - 6.4% |
| Enterprise Value | $259,005M - $328,546M |
| Net Debt | $34,774M |
| Equity Value | $224,231M - $293,772M |
| Outstanding Shares | 2,472M |
| Fair Value | $91 - $119 |
| Selected Fair Value | $104.76 |
| Metric | Value |
|---|---|
| Market Capitalization | $298838M |
| Enterprise Value | $333612M |
| Trailing P/E | 16.37 |
| Forward P/E | 15.61 |
| Trailing EV/EBITDA | 8.10 |
| Current Dividend Yield | 276.43% |
| Dividend Growth Rate (5Y) | 5.46% |
| Debt-to-Equity Ratio | 0.17 |
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% | $49.88 |
| Discounted Cash Flow (5Y) | 25% | $34.93 |
| Dividend Discount Model (Multi-Stage) | 20% | $23.36 |
| Dividend Discount Model (Stable) | 15% | $17.75 |
| Earnings Power Value | 10% | $10.48 |
| Weighted Average | 100% | $136.39 |
Based on our comprehensive valuation analysis, Merck & Co Inc's intrinsic value is $136.39, which is approximately 12.8% above the current market price of $120.87.
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.