Merck
Through the investors’ lenses
Each of these investors has said in public what they look at before buying. Click a name to see how this company measures up — a tick where it passes one of their tests, a cross where it does not.
Warren Buffett 3/4
| Measure | MRK | Checked against | |
|---|---|---|---|
| Owner earnings | $17.19bn | positive | ✓ |
| Return on equity | 34.7% | median 11.7% | ✓ |
| Debt to equity | 0.93x | median 0.79x | ✗ |
| Operating margin | 32.4% | median 15.0% | ✓ |
Passes 3 of 4. To be clear: Warren Buffett has never said anything about Merck. These are the company’s own figures put through the tests he described. What he looks at, and why →
Terry Smith 2/4
| Measure | MRK | Checked against | |
|---|---|---|---|
| Return on capital employed | 20.7% | median 10.1% | ✓ |
| Cash conversion | 0.90x | median 1.78x | ✗ |
| Operating margin | 32.4% | median 15.0% | ✓ |
| Debt to equity | 0.93x | median 0.79x | ✗ |
Passes 2 of 4. To be clear: Terry Smith has never said anything about Merck. These are the company’s own figures put through the tests he described. What he looks at, and why →
Charlie Munger 3/3
| Measure | MRK | Checked against | |
|---|---|---|---|
| Return on capital employed | 20.7% | median 10.1% | ✓ |
| Return on equity | 34.7% | median 11.7% | ✓ |
| Operating margin | 32.4% | median 15.0% | ✓ |
Passes 3 of 3. To be clear: Charlie Munger has never said anything about Merck. These are the company’s own figures put through the tests he described. What he looks at, and why →
Chuck Akre 1/4
| Measure | MRK | Checked against | |
|---|---|---|---|
| Return on equity | 34.7% | median 11.7% | ✓ |
| Debt to equity | 0.93x | median 0.79x | ✗ |
| Cash conversion | 0.90x | median 1.78x | ✗ |
| Return on equity, sustained | 7 of 10 | 8 of 10 above median | ✗ |
Passes 1 of 4. To be clear: Chuck Akre has never said anything about Merck. These are the company’s own figures put through the tests he described. What he looks at, and why →
Philip Fisher 4/4
| Measure | MRK | Checked against | |
|---|---|---|---|
| Operating margin | 32.4% | median 15.0% | ✓ |
| Net margin | 28.1% | median 10.2% | ✓ |
| Return on capital employed | 20.7% | median 10.1% | ✓ |
| Operating margin, held or improving | 32.4% | 10-yr median 18.3% | ✓ |
Passes 4 of 4. To be clear: Philip Fisher has never said anything about Merck. These are the company’s own figures put through the tests he described. What he looks at, and why →
Walter Schloss 1/2
| Measure | MRK | Checked against | |
|---|---|---|---|
| Current ratio | 1.54x | median 1.25x | ✓ |
| Debt to equity | 0.93x | median 0.79x | ✗ |
Passes 1 of 2. To be clear: Walter Schloss has never said anything about Merck. These are the company’s own figures put through the tests he described. What he looks at, and why →
Benjamin Graham 1/3
| Measure | MRK | Checked against | |
|---|---|---|---|
| Current ratio | 1.54x | 2.00x published | ✗ |
| Long-term debt to working capital | 3.08x | 1.00x published | ✗ |
| Positive earnings, ten years running | 10 yrs | 10 published | ✓ |
Passes 1 of 3. To be clear: Benjamin Graham has never said anything about Merck. These are the company’s own figures put through the tests he described. What he looks at, and why →
Joel Greenblatt 1/1
| Measure | MRK | Checked against | |
|---|---|---|---|
| Return on capital employed | 20.7% | median 10.1% | ✓ |
Passes 1 of 1. To be clear: Joel Greenblatt has never said anything about Merck. These are the company’s own figures put through the tests he described. What he looks at, and why →
Peter Lynch 1/2
| Measure | MRK | Checked against | |
|---|---|---|---|
| Debt to equity | 0.93x | median 0.79x | ✗ |
| Net margin | 28.1% | median 10.2% | ✓ |
Passes 1 of 2. To be clear: Peter Lynch has never said anything about Merck. These are the company’s own figures put through the tests he described. What he looks at, and why →
| Basis | Payout | Why |
|---|---|---|
| GAAP earnings | 45.1% | whyThe figure most screeners publish. |
| Operating cash flow | 49.6% | whyAbsorbs working-capital swings that earnings do not. |
| Free cash flow | 66.1% | whyAfter maintaining the business. |
Spread between highest and lowest: 21.1 percentage points. Same filings, different denominators.
Coverage rating 47 / 100 — Tight. ? Peer standing 8/50Direction 30/30Stability 9/20
Free cash flow payout, last 6 years
| Fiscal year | Payout |
|---|---|
| 2025-12-31 | 66.1% |
| 2024-12-31 | 43.3% |
| 2023-12-31 | 81.4% |
| 2022-12-31 | 47.7% |
| 2021-12-31 | 76.2% |
| 2020-12-31 | 106.7% |
Coverage worsened sharply this year, 43.3% to 66.1%, after no clear trend before it. One year is not a trend, but it is worth knowing which direction the last one moved.
16% of the 38 health care here pay out more — at the demanding end.
The arithmetic
- GAAP earnings — dividends declared per share $3.28 ÷ diluted EPS $7.28
- Operating cash flow — dividends paid $8,176m ÷ operating cash flow $16,472m
- Free cash flow — dividends paid $8,176m ÷ (operating cash flow $16,472m − capex $4,112m)
Where the figures came from
- 10-K filed 2026-02-24 · accession 0000310158-26-000063
All public at sec.gov — you should not have to take our word for it.
Computed straight from SEC XBRL. A number that looks wrong to you is more useful to us than agreement — tell us.
What the free cash flow payout ratio measures, and where every company here sits on it.
Also on: rated tight · when it files.
When this changes
Every figure above is recomputed whenever Merck files. The monthly letter carries what filed, what moved, and one finding computed across every company here.