As of December 24, 2025, Merck & Co Inc's estimated intrinsic value ranges from $99.62 to $139.41 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $139.41 | +32.7% |
| Discounted Cash Flow (5Y) | $119.55 | +13.8% |
| Dividend Discount Model (Multi-Stage) | $99.62 | -5.2% |
| Dividend Discount Model (Stable) | $104.41 | -0.6% |
| Earnings Power Value | $100.22 | -4.6% |
Is Merck & Co Inc (MRK) undervalued or overvalued?
With the current market price at $105.04, 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 | 0.55 | 0.64 |
| Cost of equity | 6.4% | 8.4% |
| Cost of debt | 4.0% | 4.5% |
| Tax rate | 13.1% | 17.6% |
| Debt/Equity ratio | 0.15 | 0.15 |
| After-tax WACC | 6.0% | 7.8% |
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 | $120 | $319,935M | 78.3% |
| 10-Year Growth | $139 | $369,211M | 61.0% |
| 5-Year EBITDA | $86 | $237,064M | 70.7% |
| 10-Year EBITDA | $110 | $296,328M | 51.4% |
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 | $18,490M |
| Discount Rate (WACC) | 7.8% - 6.0% |
| Enterprise Value | $236,617M - $307,283M |
| Net Debt | $23,205M |
| Equity Value | $213,412M - $284,078M |
| Outstanding Shares | 2,482M |
| Fair Value | $86 - $114 |
| Selected Fair Value | $100.22 |
| Metric | Value |
|---|---|
| Market Capitalization | $260711M |
| Enterprise Value | $283916M |
| Trailing P/E | 13.70 |
| Forward P/E | 15.26 |
| Trailing EV/EBITDA | 7.70 |
| Current Dividend Yield | 323.19% |
| Dividend Growth Rate (5Y) | 5.98% |
| Debt-to-Equity Ratio | 0.15 |
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% | $41.82 |
| Discounted Cash Flow (5Y) | 25% | $29.89 |
| Dividend Discount Model (Multi-Stage) | 20% | $19.92 |
| Dividend Discount Model (Stable) | 15% | $15.66 |
| Earnings Power Value | 10% | $10.02 |
| Weighted Average | 100% | $117.32 |
Based on our comprehensive valuation analysis, Merck & Co Inc's intrinsic value is $117.32, which is approximately 11.7% above the current market price of $105.04.
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.