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Merck Free Cash Flow per Share

: $5.67 (TTM As of Jun. 2022)
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Merck's Free Cash Flow per Share for the three months ended in Jun. 2022 was $1.25. Its Free Cash Flow per Share for the trailing twelve months (TTM) ended in Jun. 2022 was $5.67.

During the past 12 months, the average Free Cash Flow per Share Growth Rate of Merck was 161.30% per year. During the past 3 years, the average Free Cash Flow per Share Growth Rate was 7.10% per year. During the past 5 years, the average Free Cash Flow per Share Growth Rate was 6.40% per year. During the past 10 years, the average Free Cash Flow per Share Growth Rate was 0.40% per year. Please click Growth Rate Calculation Example (GuruFocus) to see how GuruFocus calculates Wal-Mart Stores Inc (WMT)'s revenue growth rate. You can apply the same method to get the FCF Growth Rate using Free Cash Flow per Share data.

The historical rank and industry rank for Merck's Free Cash Flow per Share or its related term are showing as below:

MRK' s 3-Year FCF Growth Rate Range Over the Past 10 Years
Min: -31.5   Med: 7.3   Max: 45.6
Current: 7.1

During the past 13 years, Merck's highest 3-Year average Free Cash Flow per Share Growth Rate was 45.60% per year. The lowest was -31.50% per year. And the median was 7.30% per year.

MRK's 3-Year FCF Growth Rate is ranked worse than
51.6% of 748 companies
in the Drug Manufacturers industry
Industry Median: 8.50 vs MRK: 7.10

Merck Free Cash Flow per Share Historical Data

The historical data trend for Merck's Free Cash Flow per Share 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.

* Premium members only.

Merck Annual Data
Trend Dec12 Dec13 Dec14 Dec15 Dec16 Dec17 Dec18 Dec19 Dec20 Dec21
Free Cash Flow per Share
Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 1.66 3.10 3.90 2.29 3.81

Merck Quarterly Data
Sep17 Dec17 Mar18 Jun18 Sep18 Dec18 Mar19 Jun19 Sep19 Dec19 Mar20 Jun20 Sep20 Dec20 Mar21 Jun21 Sep21 Dec21 Mar22 Jun22
Free Cash Flow per Share Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 0.59 1.43 1.51 1.49 1.25

Merck Free Cash Flow per Share Calculation

Free Cashflow per Share is the amount of Free Cashflow per outstanding share of the company's stock.

Free Cash Flow is considered one of the most important parameters to measure a company's earnings power by value investors because it is not subject to estimates of Depreciation, Depletion and Amortization (DDA). However, when we look at the Free Cash Flow, we should look from a long term perspective, because any year's Free Cash Flow can be drastically affected by the spending on Property, Plant, & Equipment (PPE) of the business in that year. Over the long term, Free Cash Flow should give pretty good picture on the real earnings power of the company.

Note: GuruFocus does not calculate Free Cash Flow Per Share when Capital Expenditure is 0.

Merck's Free Cash Flow Per Share for the fiscal year that ended in Dec. 2021 is calculated as

Free Cash Flow Per Share(A: Dec. 2021 )
=(Cash Flow from Operations+Capital Expenditure)/Shares Outstanding (Diluted Average)
=(14109+-4448)/2538.000
=9661/2538.000
=3.81

Merck's Free Cash Flow Per Share for the quarter that ended in Jun. 2022 is calculated as

Free Cash Flow Per Share(Q: Jun. 2022 )
=(Cash Flow from Operations+Capital Expenditure)/Shares Outstanding (Diluted Average)
=(4302+-1129)/2540.000
=3173/2540.000
=1.25

Free Cash Flow per Share for the trailing twelve months (TTM) ended in Jun. 2022 adds up the quarterly data reported by the company within the most recent 12 months, which was $5.67

* 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.


Merck  (NYSE:MRK) Free Cash Flow per Share Explanation

Free Cash Flow is very close to Warren Buffett's definition of Owner's Earnings, except that in Warren Buffett's Owner's Earnings, the spending for Property, Plant, and Equipment is only for maintenance (replacement), while in the Free Cash Flow calculation, the cost of new Property, Plant, and Equipment due to business expansion is also deducted. There, Free Cash Flow is more conservative than Owner's Earnings.

In Don Yacktman's calculation of forward rate of return, he uses Free Cash Flow for the calculation. Yacktman explained the forward rate of return concept in detail in his interview with GuruFocus. Yacktman defines forward rate of return as the normalized free cash flow yield plus real growth plus inflation.

This is what Yacktman said in his March 2012 interview - when the S&P 500 was at 1400:

If the business is stable, this calculation is fairly straightforward. For instance, on the S&P 500 we would normalize earnings. We would then calculate what percentage of those earnings are not reinvested in the underlying businesses and are therefore free. Historically, for the S&P 500, this has been just under 50% of earnings. Currently, we expect the S&P to earn about 70 on a normalized basis, a number which is far below reported earnings due to our adjusting for record high profit margins. $70 X ½ / 1400 gives you a normalized free cash flow yield of approximately 2.5%.

The historical real growth rate of the S&P 500 (companies) is about 1.5%. Assuming an inflation rate of 2.5%, the forward rate of return on an investment in the S&P 500 is about 6.5% today (2.5% free cash flow yield plus 1.5% real growth plus 2.5% inflation).

For the growth part of the Forward Rate of Return calculation, GuruFocus uses the 5-year average growth rate of EBITDA per share as the growth rate, and the growth rate is always capped at 20%. For the Free Cash Flow we use per share data averaged over seven years. The reason we use seven years is because research shows that seven years is the length of the typical business cycle.

Therefore, as of Dec21, Merck's Forward Rate of Return (Yacktman) % is

Forward Rate of Return (Yacktman) % (Dec21)=Normalized Free Cash Flow/Price+5-Year EBITDA Growth Rate
=3.34133333/91.17+0.0894
=12.60 %

* 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.


Be Aware

Free Cash Flow within a report period can be affected by management's decisions of capital spending. Therefore, it is important to look at long term when it comes to Free Cash Flow.


Merck Free Cash Flow per Share Related Terms

Thank you for viewing the detailed overview of Merck's Free Cash Flow per Share provided by GuruFocus.com. Please click on the following links to see related term pages.


Merck Business Description

Merck logo
Address
2000 Galloping Hill Road, Kenilworth, NJ, USA, 07033
Merck makes pharmaceutical products to treat several conditions in a number of therapeutic areas, including cardiometabolic disease, cancer, and infections. Within cancer, the firm's immuno-oncology platform is growing as a major contributor to overall sales. The company also has a substantial vaccine business, with treatments to prevent hepatitis B and pediatric diseases as well as HPV and shingles. Additionally, Merck sells animal health-related drugs. From a geographical perspective, close to half of the firm's sales are generated in the United States.
Executives
Baker Douglas M Jr director 370 WBASHA ST NORTH ST PAUL MN 55102
Oosthuizen Johannes Jacobus officer: SVP, U.S. Market 2000 GALLOPING HILL RD KENILWORTH NJ 07033
Garay Arpa officer: SVP Human Health Global Mktg. 2000 GALLOPING HILL RD KENILWORTH NJ 07033
Downing Cristal N officer: Chief Comm. & Public Afrs Ofcr 2000 GALLOPING HILL RD KENILWORTH NJ 07033
Klobuchar Michael A officer: EVP - Chief Strategy Officer 2000 GALLOPING HILL RD KENILWORTH NJ 07033
Lecointe-cephas Lisa officer: SVP Chief Ethics & Com Officer 2000 GALLOPING HILL RD KENILWORTH NJ 07033
Litchfield Caroline officer: EVP & CFO 2000 GALLOPING HILL RD KENILWORTH NJ 07033
Mayo Stephen director 2000 GALLOPING HILL RD KENILWORTH NJ 07033
Li Dean Y officer: Executive VP & President, MRL 2000 GALLOPING HILL ROAD KENILWORTH NJ 07033
Williams David Michael officer: EVP,Chief Info&Digital Officer MERCK & CO., INC. 2000 GALLOPING HILL ROAD KENILWORTH NJ 07033
Lavizzo-mourey Risa J director GENERAL ELECTRIC COMPANY 5 NECCO STREET BOSTON MA 02210
Seidman Christine E director MERCK & CO., INC. 2000 GALLOPING HILL ROAD KENILWORTH NJ 07033
Warden Kathy J director 2980 FAIRVIEW PARK DRIVE FALLS CHURCH VA 22042
Craig Pamela director C/O ACCENTURE 161 N CLARK STREET CHICAGO IL 60601
Brun Leslie A director 435 DEVON PARK DRIVE 700 BUILDING WAYNE PA 19087

Merck Headlines

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