Using the PEG framework with analyst consensus forward EPS growth of 9.7% plus 2.8% dividend yield, Merck & Co., Inc. has a fair value of $49.49 based on NTM EPS (FY2026) of $5.12. The current PEG ratio is 2.41.
PEG < 1 = bargain, 1–1.5 = fair, > 2 = expensive.
PEG tends to undervalue slow growers — consider dividend yield and asset value instead.
| EPS Growth RateForward | 6.9% |
| Dividend Yield | +2.8% |
| Adjusted Growth (clamped 8–25%) | 9.7% |
| Fair P/E | 9.7x |
| NTM EPS (FY2026) | $5.12 |
| Fair Value | $49.49 |
| Period | EPS Est. | Growth | Analysts |
|---|---|---|---|
| FY2025 (actual) | $7.28 | — | — |
| FY2026E | $5.12 | -29.6% | 17 |
| FY2027E | $9.70 | +89.3% | 17 |
| FY2028E | $10.77 | +11.0% | 18 |
| FY2029E | $10.36 | -3.8% | 11 |
| FY2030E | $10.16 | -2.0% | 9 |
5Y Forward EPS CAGR: 6.9%
| Year | Net Income | EPS | YoY |
|---|---|---|---|
| FY2021 | $13.0B | $5.14 | — |
| FY2022 | $14.5B | $5.71 | +11.1% |
| FY2023 | $365.0M | $0.14 | -97.5% |
| FY2024 | $17.1B | $6.74 | +4714.3% |
| FY2025 | $18.3B | $7.28 | +8.0% |
4Y Historical EPS CAGR: 9.1%
The PEG Fair Value uses the Price/Earnings-to-Growth framework. A stock is fairly valued when its P/E ratio equals its earnings growth rate (PEG = 1.0). This model adds dividend yield to the growth rate per the original PEGY formula.
Growth rate priority: analyst consensus forward EPS CAGR (when ≥ 3 analysts cover the stock), falling back to historical EPS CAGR. Using EPS rather than net income avoids distortion from share buybacks. The growth rate is clamped between 8% and 25% — below 8% would undervalue stable earners, while above 25% would overvalue unsustainable spikes.