Is Merck & Co., Inc. overvalued or undervalued?

As of 7 July 2025, the valuation grade for Merck & Co., Inc. has moved from fair to attractive, indicating a positive shift in its perceived value. The company appears undervalued, supported by a P/E ratio of 15, a PEG ratio of 0.03, and an EV to EBITDA ratio of 11.50, which are all favorable compared to industry standards.
In comparison to its peers, Merck's P/E ratio of 15.68 is lower than Eli Lilly & Co.'s 40.89, which is considered expensive, and also lower than Johnson & Johnson's 26.18, which is rated attractive. Additionally, Merck's dividend yield of 5.70% and ROE of 40.02% further enhance its appeal. However, the company's recent stock performance has lagged behind the S&P 500, with a year-to-date return of -18.04% compared to the index's 12.22%, suggesting that the market may not fully reflect its intrinsic value yet.