Merck KGaA
🇩🇪 MRK.XETRA · Frankfurt · DE0006599905
Healthcare
EUR 127.50 price at analysis
Scores
Key Metrics
Powered by EODHDP/E (TTM)
21.3
P/E (Price-to-Earnings)Shows how much investors pay for each $1 of profit. We display the TTM P/E (Trailing Twelve Months) which uses actual earnings from the last 4 quarters. This is more reliable than Forward P/E which uses analyst estimates.
Calculation: 127.50 ÷ 6.00 = 21.3
TTM period through: 2025-12-31
Forward P/E (estimated): 19.6
Based on analyst estimates
Reference: Provider P/E (Trailing): 21.7
Yield (Fwd)
1.73%
Dividend YieldThe Forward yield (Fwd) shows the next announced annual dividend / current price — what you'd earn going forward. The Trailing yield (TTM) in the tooltip shows dividends actually paid in the last 12 months. Forward is shown as primary because it reflects the company's current commitment to shareholders.
Trailing Yield (TTM): 1.79%
Div. Growth (5Y CAGR)
8.8%
Growth Streak
1 yrs
Consecutive years of increase
Net Debt/EBITDA (TTM)
1.6x
Latest quarter: 6.2x
Net Debt / EBITDAA leverage ratio showing how many years of EBITDA (earnings before interest, taxes, depreciation, and amortization) it would take to repay net debt. EBITDA approximates operating cash generation. Lower ratios (e.g., <3x) are generally safer; higher (e.g., >5x) may indicate more financial risk.
TTM through: 2025-12-31
Latest quarter (2026-03-31): 6.2x
The quarterly value can spike when quarterly EBITDA is very low (e.g., one-time charges).
Quick guide: <2x manageable, >4x can be risky (sector-dependent).
Payout (Fwd)
36.7%
Payout RatioDividends as a percentage of earnings. The Forward payout (Fwd) uses the announced dividend divided by actual past earnings (TTM) — it tells you if the company can afford what it promised. Very high payouts can be risky, especially if profits fall.
Announced dividend / actual earnings (TTM)
Payout (TTM): 39.8%
Cash Flow Payout (TTM): 26.4%
FCF Coverage (TTM): 2.26x
ROE
8.5%
ROE (Return on Equity)A profitability measure: how much profit is generated from shareholders’ equity. Higher isn’t always better if it comes from high debt.
EV/EBITDA
10.3x
EV/EBITDAA valuation ratio that compares total business value (including debt) to EBITDA. Lower can mean cheaper, but context matters.
📊 What Changed From Last Analysis?
Moved from WATCH to BELOW THRESHOLD: Valuation has expanded further (P/E 21.26, price €127.50) while emerging management uncertainty (CEO departure reports) and flagged margin pressures compound the existing strategy mismatch of a low yield and history of severe dividend cuts.
Summary
Merck KGaA is a well-capitalized science and technology leader, but its current profile presents a stark strategy mismatch for income investors. The combination of an elevated valuation (P/E 21.26), sub-2% yield, a history of severe dividend cuts, and recent management uncertainty makes this unsuitable for conservative dividend portfolios. Not recommended for new positions, as better value and yield opportunities exist in more stable essential services.
Sector Context
Merck KGaA is a diversified global science and technology company operating across healthcare, life science, and electronics. While pharmaceutical and life science revenues typically offer defensive, stable cash flows suitable for dividend investing, the company's electronics and semiconductor exposure introduces cyclicality that can disrupt earnings and dividend consistency.
Temporary Opportunity Identified
Cyclical destocking in the Life Sciences division and semiconductor downturns in Electronics have temporarily depressed earnings, alongside newly flagged margin pressures for 2026.
📊 Strategy Analysis
- • Conservative balance sheet with Net Debt/EBITDA deleveraged significantly to a healthy 1.55x
- • Excellent free cash flow generation (€3.65B) provides a robust 2.26x coverage for the current reduced dividend payout
- • Positive pipeline developments, including FDA acceptance of a new drug application for pimicotinib
⚠ What to Watch
- • Dividend yield of 1.79% falls significantly below the strategy's 3% minimum requirement, compounded by a massive 75.3% cut in 2024 and an announced 7.9% proposed cut for 2026
- • Overvalued at €127.50 with a P/E of 21.26, well above the calculated monopoly fair value bound of €107.97
- • Significant management transition risk following reports of CEO Belén Garijo's departure to Sanofi
- • Company has flagged upcoming 2026 margin pressures from its Multiple Sclerosis drug portfolio
📊 Historical Trends (10 Years)
Powered by EODHDThese charts show how key metrics have evolved over the past decade, helping you identify if the company is improving or deteriorating.
Debt Evolution (Net Debt / EBITDA)
Lower values are better. A declining trend indicates the company is reducing its debt (deleveraging).
Revenue & Earnings Growth
Consistent growth in revenueRevenue
The money a company brings in from selling its products or services. It’s the top line before costs. (blue) and earningsEarnings (Profit)
What’s left after expenses. Positive earnings mean the business made a profit; negative means a loss. (green) indicates a healthy business. Look for upward trends and recoveries after temporary dips.
Dividend Sustainability (FCF vs Dividends Paid)
Free cash flowFree Cash Flow
Cash left after the company pays for running the business and maintaining it. Often used to fund dividends, pay debt, or buy back shares. (FCFFCF (Free Cash Flow)
Short for Free Cash Flow: cash left after operating needs and maintenance spending., blue) should cover dividends paidDividends Paid
Cash the company paid out to shareholders. It’s not guaranteed and can change over time. (green). If dividends consistently exceed FCFFCF (Free Cash Flow)
Short for Free Cash Flow: cash left after operating needs and maintenance spending., the dividend may be at risk.
Analysis date: 2026-05-23
Disclaimer: This information is for educational purposes only. Not financial advice.