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What does value investing really mean? Q1 2021 hedge fund letters, conferences and more Some investors might argue value investing means buying stocks trading at a discount to net asset value or book value. This is the sort of value investing Benjamin Graham pioneered in the early 1920s and 1930s. Other investors might argue value Read More
Stock of the week for 03/06/2015: Merck & Co., Inc. (MRK)
Global health care firm makes prescription medicines, vaccines, biologic therapies and animal health products, and has customers or operations in more than 140 countries.
The stock gets a 93% score from Validea’s P/E/G Growth Investor model, based on Peter Lynch’s approach outlined in One Up on Wall Street and a 100% score based on the Cornerstone Value model developed by James O’Shaughnessy and outlined in his book, What Works On Wall Street.
Gets strong interest from Peter Lynch model, which likes its reasonable 14.3 P/E and 0.37 P/E-to-Growth ratio.
The stock carries an attractive 3.1% dividend yield.
Merck has a debt/equity ratio of 56%, well below the 133% biotech & drugs industry average, which the Martin Zweig-based model likes.
James O’Shaughnessy-based value model likes its size ($42 billion in TTM sales). The O’Shaughnessy approach also likes its solid dividend and good cash flow ($3.43 per share vs. market mean of $1.80).
The company has an attractive TTM profit margin of 28.5%.
The firm has averaged a return on retained earnings (those not paid out as dividends) of 21.8% over the past decade, impressing the Warren Buffett model.
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