Merck & Co.‘s CAPE ratio

Merck & Co.’s CAPE ratio is a valuation metric that smooths out earnings volatility by using a 10-year inflation-adjusted average of earnings per share (EPS). A high CAPE ratio may indicate overvaluation, while a low ratio could suggest undervaluation. Given Merck’s exposure to pharmaceutical R&D cycles, regulatory approvals, and patent cliffs, its CAPE ratio can fluctuate significantly. Investors use this metric alongside other valuation tools, such as forward P/E and discounted cash flow (DCF) analysis, to assess long-term investment potential.