Why Merck (MRK) is a Top Value Stock for the Long-Term

For new and old investors, taking full advantage of the stock market and investing with confidence are common goals.

While you may have an investing style you rely on, finding great stocks is made easier with the Zacks Style Scores. These are complementary indicators that rate stocks based on value, growth, and/or momentum characteristics.

Why Investors Should Pay Attention to This Value Stock

Different than growth or momentum investors, value-focused investors are all about finding good stocks at good prices, and discovering which companies are trading under what their true value is before the broader market catches on. The Value Style Score utilizes ratios like P/E, PEG, Price/Sales, and Price/Cash Flow to help pick out the most attractive and discounted stocks.

Merck (MRK)

Based in Kenilworth, NJ, Merck & Co. boasts more than six blockbuster drugs in its portfolio with PD-L1 inhibitor, Keytruda, approved for several types of cancer, alone accounting for around 40% of its pharmaceutical sales. Keytruda has played an instrumental role in driving Merck’s steady revenue growth in the past few years. Though Keytruda may be Merck’s biggest strength and a solid reason to own the stock, it can also be argued that Merck is excessively dependent on the drug and should look for ways to diversify its product lineup.

MRK sits at a Zacks Rank #3 (Hold), holds a Value Style Score of B, and has a VGM Score of B. Compared to the Large Cap Pharmaceuticals industry's P/E of 13.2X, shares of Merck are trading at a forward P/E of 12.1X. MRK also has a PEG Ratio of 1.2, a Price/Cash Flow ratio of 12X, and a Price/Sales ratio of 4.1X.

Many value investors pay close attention to a company's earnings as well. For MRK, four analysts revised their earnings estimate upwards in the last 60 days, and the Zacks Consensus Estimate has increased $0.00 to $7.28 per share for 2022. Per share MRK boasts an average earnings surprise of 13.4%.

MRK should be on investors' short lists because of its impressive earnings and valuation fundamentals, a good Zacks Rank, and strong Value and VGM Style Scores.

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