Merck & Co., Inc. (MRK) vs Novartis AG (NVS)

Merck & Co., Inc. and Novartis AG are both Drug Manufacturers General companies. Merck & Co., Inc. is the larger, with a market value of $365.4B against $264.3B — 1.4× the size. Novartis AG trades at the lower P/E: 21.8× against 119×. Merck & Co., Inc. grew revenue faster over the last twelve months: 4.64% against 2.73%. Novartis AG has the higher net margin (22.5% vs 4.77%) and the higher return on invested capital (13.1% vs 5.08%). Both pay a dividend; Novartis AG yields more (3.69% vs 2.58%). Across the 23 metrics below, Novartis AG leads on 19 and Merck & Co., Inc. on 4.

Valuation

Metric MRK NVS Drug Manufacturers General median
P/E 119.02 21.84 24.72
P/S 5.52 4.89 3.35
P/B 8.75 6.61 5.00
Price to free cash flow 22.88 18.26 17.68
EV/EBITDA 30.03 14.04 13.91
EV/Sales 6.18 5.58 3.95
Earnings yield 0.84% 4.58% 2.92%
Free cash flow yield 4.37% 5.48% 4.42%

Profitability

Metric MRK NVS Drug Manufacturers General median
Gross margin 72.97% 74.74% 72.77%
Operating margin 10.49% 30.17% 18.90%
Net margin 4.77% 22.50% 8.27%
Free cash flow margin 24.13% 26.77% 17.25%
Return on equity 6.97% 30.37% 6.97%
Return on assets 2.57% 11.27% 2.76%
Return on invested capital 5.08% 13.14% 6.30%

Growth

Metric MRK NVS Drug Manufacturers General median
Revenue growth (TTM) 4.64% 2.73% 6.79%
EPS growth (last fiscal year) 8.01% 21.81% —
Revenue growth, 5-year CAGR 9.38% 2.58% 3.98%
Net income growth, 5-year CAGR 20.90% 11.62% 0.42%

Health

Metric MRK NVS Drug Manufacturers General median
Debt to equity 1.22 1.12 0.63
Current ratio 1.32 0.86 1.32
Net debt to EBITDA 1.15 0.96 1.15

Dividend

Metric MRK NVS Drug Manufacturers General median
Dividend yield 2.58% 3.69% 3.57%
Payout ratio 2.36 0.97 0.53

Size

Metric MRK NVS Drug Manufacturers General median
Market cap 365.36b 264.33b 125.91b

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