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Degree of Operating Leverage (DOL) measures the percentage change in EBIT for a unit change in Revenue.
Merck KGaA's Degree of Operating Leverage for the quarter that ended in Jun. 2026 was 3.90. The higher Degree of Operating Leverage, the higher operating risk the company will take.
The industry rank for Merck KGaA's Degree of Operating Leverage or its related term are showing as below:
XSWX:MER's Degree of Operating Leverage is ranked worse than 73.24% of 938
companies
in the Drug Manufacturers industry
Industry Median: 0.985
vs XSWX:MER: 3.90
Merck KGaA (XSWX:MER) Degree of Operating Leverage Explanation
Degree of Operating Leverage (DOL) is a leverage ratio that measures the sensitivity of a company’s operting income, also referred to as Earnings Before Interest and Taxes (EBIT), to fluctuations in its Revenue. DOL is a method used to quantify a company’s operating risk. This risk is related to the company's structure of variable costs and fixed costs. Since the fixed costs do not allow the company to adjust the operating costs, the operating risk rises with a higher fixed-to-variable costs proportion.
A high Degree of Operating Leverage indicates that the company’s fixed costs exceed its variable costs. By increasing the sales, the company can earn more profits. In addition, the company must be able to maintain relatively high sales to cover all fixed costs.
Be Aware
The use of operating leverage varies across different industries and business sectors, and the application of Degree of Operating Leverage (DOL) should be adjusted accordingly.
Merck KGaA Degree of Operating Leverage Related Terms
Merck KGaA Degree of Operating Leverage Historical Data
* Premium members only.
The historical data trend for Merck KGaA's Degree of Operating Leverage can be seen below:
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
XSWX:MER vs ZTS, UTHR, VTRS: Degree of Operating Leverage Comparison
For the Drug Manufacturers - Specialty & Generic subindustry, Merck KGaA's Degree of Operating Leverage, along with its competitors' market caps and Degree of Operating Leverage data, can be viewed below:
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.
Merck KGaA Degree of Operating Leverage vs Drug Manufacturers Industry
For the Drug Manufacturers industry and Healthcare sector, Merck KGaA's Degree of Operating Leverage distribution charts can be found below:
* The bar in red indicates where Merck KGaA's Degree of Operating Leverage falls into.
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
** TTM data of EBIT and Revenue was used to calculate Degree of Operating Leverage.
*** Please be aware that the Degree of Operating Leverage calculations are based on company-level data using the primary share class. The calculated data provided is for demonstration purposes and may slightly differ from the results displayed in the title due to potential variations caused by currency exchange rate differences throughout the year.
What does a Degree of Operating Leverage of 3.90 mean?
Merck KGaA (XSWX:MER) has a Degree of Operating Leverage of 3.90 as of Jun. 2026. Degree of Operating Leverage (DOL) measures the percentage change in EBIT for a unit change in Revenue. View historical data for Merck KGaA and its competitors. According to the industry distribution chart, Merck KGaA ranks #687 out of 938 companies in the Drug Manufacturers industry, placing it in the top 73.2%.
Is Merck KGaA's Degree of Operating Leverage too high?
Merck KGaA's current Degree of Operating Leverage is 3.90. The Drug Manufacturers industry median Degree of Operating Leverage is 0.99. Merck KGaA's value of 3.90 is 295.9% above this industry median. Based on the distribution chart, Merck KGaA ranks #687 out of 938 companies in the Drug Manufacturers industry, which is below the industry midpoint. Overall, Merck KGaA has a GF Score™ of 84/100, reflecting its overall financial health beyond just this single metric.
How does Merck KGaA's Degree of Operating Leverage compare to ZTS and UTHR?
According to the Drug Manufacturers industry distribution chart, Merck KGaA ranks #687 out of 938 companies for Degree of Operating Leverage. This places Merck KGaA in the lower half of its industry. The industry median Degree of Operating Leverage is 0.99. Merck KGaA's value of 3.90 is 295.9% above this benchmark. See the competitive comparison table and distribution chart on this page for a detailed peer-by-peer breakdown.
What is a good Degree of Operating Leverage for a Drug Manufacturers company?
The median Degree of Operating Leverage among Drug Manufacturers companies is 0.99, based on 938 companies in the industry. Companies in the top quartile (top 25%) have a Degree of Operating Leverage significantly above this median, while those in the bottom quartile fall well below. However, Degree of Operating Leverage should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. Merck KGaA's current Degree of Operating Leverage of 3.90 is 295.9% above the industry median. Use the industry distribution chart on this page to see where any company falls relative to its peers.
What does a high Degree of Operating Leverage mean?
A high Degree of Operating Leverage can signal that a stock is expensive relative to its fundamentals. Degree of Operating Leverage (DOL) measures the percentage change in EBIT for a unit change in Revenue. View historical data for Merck KGaA and its competitors. For the Drug Manufacturers industry, the median Degree of Operating Leverage is 0.99 — values significantly above this may indicate overvaluation, while values below may suggest a bargain or underlying issues. Merck KGaA's current Degree of Operating Leverage is 3.90. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is Merck KGaA stock overvalued right now?
Merck KGaA (XSWX:MER) has a current Degree of Operating Leverage of 3.90. The stock's GF Value™ is CHF134.85, compared to a current price of CHF130.50 — trading 3.2% below its estimated fair value. The current Degree of Operating Leverage is 3.90 and 295.9% above the Drug Manufacturers industry median of 0.99. Merck KGaA's overall GF Score™ is 84/100 with 10 warning signs to review. Investors should evaluate multiple metrics — including profitability, growth, and financial strength — before making a decision.
How is Degree of Operating Leverage calculated?
Degree of Operating Leverage is calculated from a company's financial statements. For Merck KGaA (XSWX:MER), the current Degree of Operating Leverage is 3.90 as of Jun. 2026. GuruFocus calculates this using data sourced from SEC filings and annual reports. See the calculation section and 30-year financial data on this page for the full breakdown.
Is Merck KGaA (XSWX:MER) Overvalued in 2026?
Based on GuruFocus' analysis, Merck KGaA stock appears to be undervalued.
The current stock price of CHF130.50 is trading 3.2% below its estimated GF Value™ of CHF134.85.
Key valuation signals for XSWX:MER:
Degree of Operating Leverage: 3.90
GF Value™: CHF134.85 vs. price of CHF130.50 (3.2% below fair value)
Industry Position: 295.9% above the Drug Manufacturers median (#687 of 938)
No single metric tells the full story. See the XSWX:MER stock analysis page for a complete view including 30-year financials, guru trades, and insider activity.
Merck KGaA operates in three main segments: Life Science, Electronics, and Healthcare. The Life Science segment provides laboratory consumables and instruments to researchers in academia and applied fields, including the biopharmaceutical industry. The Electronics segment offers specialty materials to manufacture a variety of products, such as semiconductors and flat-screen televisions. In the healthcare segment, Merck develops, manufactures, and sells branded pharmaceuticals with significant therapeutic concentrations in oncology, multiple sclerosis, and fertility. In 1995, the E. Merck KG family publicly sold part of the company, resulting in the current 30% public ownership of the firm.
84GF Score
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