Merck & Company, Inc. (MRK) vs NIKE, Inc. (NKE): Which Is the Better Buy in 2026?
As of 2026-08-03, MRK is undervalued at $130, with a DCF intrinsic value of $1474147659576 and a margin of safety of 100%. NKE is undervalued at $42, with an intrinsic value of $164 and a margin of safety of 74%. Of the two, MRK has the wider margin of safety.
Rewards
- ★Gross margin of 76.7% indicates strong pricing power — typical of businesses with significant intellectual property or brand strength.
- ★Each dollar of retained earnings has created $4.94 of earning power — management is an exceptional capital allocator.
- ★Management has timed buybacks well — 2 out of 3 years showed value-accretive repurchases.
- ★NIKE, Inc. has maintained ROIC above 10% for 4 consecutive years, suggesting solid business economics.
- ★NIKE, Inc. scores 71/100 on the Economic Moat Score (Wide Moat), with roic consistency as the strongest competitive dimension.
- ★Return on equity has consistently exceeded 20% over 4 years, indicating efficient use of shareholder capital.
Risks
- ⚠PEG ratio of 12.06 indicates the stock is expensive relative to its expected growth — the market may be pricing in more growth than analysts project.
- ⚠14 insider sales with no purchases over the past 12 months — a persistent pattern of insider selling.
- ⚠Free cash flow has declined at a 5.6% CAGR over the past 4 years — a concerning trend.
- ⚠Free cash flow has declined at a 23.5% CAGR over the past 4 years — a concerning trend.
Key Valuation Metrics
Learn more →Historical Fundamentals
Learn more →Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation. The dashed forward point is the forward P/E — today's price ÷ analyst consensus EPS.
Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation. The dashed forward point is the forward P/E — today's price ÷ analyst consensus EPS.
Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation. The dashed forward point is the forward P/E — today's price ÷ analyst consensus EPS.
$1 Retained Earnings Test
Learn more →> $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer
> $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer
Buffett's "$1 Test": For every $1 of earnings retained, has management created at least $1 of market value?
> $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer
Discounted Cash Flow (DCF) Analysis
Learn more →Reverse DCF — Market-Implied Growth
Learn more →What growth rate is the market pricing in at $130?
The market implies -26.9% Owner Earnings growth, below historical trends — potential opportunity.
Standard FCF implies a more demanding -20.2%, reflecting heavy growth investment expected to generate future returns.
What growth rate is the market pricing in at $42?
The market implies +7.6% Owner Earnings growth, above historical trends.
Standard FCF implies a demanding +14.8%, reflecting heavy growth investment.
Economic Moat Score
Learn more →Narrow moat with revenue predictability as the key competitive advantage. Improving margin stability would strengthen the moat.
Wide moat with strength across all dimensions. ROIC Consistency is the standout factor.
Forensic Accounting
Learn more →M-Score Trend
M-Score Trend
Beneish's 8-variable model estimates the probability of earnings manipulation. An M-Score above -1.78 signals elevated risk — companies in this range have historically been 3-5× more likely to be manipulating earnings. Scores between -2.22 and -1.78 fall in a grey zone warranting further investigation.
Ownership Breakdown
Learn more →High insider ownership aligns management incentives with shareholders. Institutional concentration can indicate smart-money conviction but also crowding risk.
Insider Buying Activity
Learn more →Open market purchases · includes direct & indirect ownership · excludes option exercises.
Insider Selling Activity
Learn more →Direct ownership only · excludes indirect, option exercises, planned (10b5-1) sales & derivatives.
🎭 Mr. Market's Mood
Learn more →"Market is optimistic — be cautious and ensure you have a margin of safety"
"Market is pessimistic — investigate whether fears are temporary or structural"
Composite sentiment score based on market signals. Inspired by Buffett’s "Mr. Market" allegory — fear = potential opportunity, greed = potential risk. Must be used alongside fundamental analysis, not in isolation.
⚖️ Buffett Signal
Learn more →The Buffett Signal cross-references market sentiment with DCF valuation. Configure the DCF Analysis above to generate a signal.
The Buffett Signal cross-references market sentiment with DCF valuation. Configure the DCF Analysis above to generate a signal.
Frequently Asked Questions: MRK vs NKE
Is Merck & Company, Inc. or NIKE, Inc. more undervalued in 2026?▼
Based on our discounted cash flow model, MRK trades at a 100.0% margin of safety (intrinsic value $1474147659576 vs. price $130), compared to NKE's 74.5% margin of safety (intrinsic $164 vs. $42).
Which stock has a wider economic moat, Merck & Company, Inc. or NIKE, Inc.?▼
NKE scores 71/100 (Wide moat), while MRK scores 68/100 (Narrow moat). The moat score measures competitive advantage durability across ROIC consistency, margin stability, revenue predictability, and reinvestment efficiency.
Is Merck & Company, Inc. in financial distress?▼
MRK's Altman Z-Score of 1.9 places it in the Grey zone, signaling elevated bankruptcy risk. NKE scores 3.5 (Safe zone). The Altman Z-Score is a five-factor model that predicts insolvency within two years; scores below 1.81 indicate significant distress.
Which stock has higher return on invested capital, Merck & Company, Inc. or NIKE, Inc.?▼
MRK earns 21.1% ROIC versus NKE's 17.9%. A higher ROIC means the company generates more profit per dollar of capital employed, a hallmark of durable competitive advantage in Buffett-style analysis.
Which dividend is safer, Merck & Company, Inc.'s or NIKE, Inc.'s?▼
MRK's dividend earns a safety score of 79/100 (Safe), compared to NKE's 34/100 (Unsafe). MRK has raised its dividend for 3 consecutive years.