Merck KGaA Operating Margin vs. Return On Asset

MKKGY Stock  USD 29.52  0.25  0.84%   
Based on the key profitability measurements obtained from Merck KGaA's financial statements, Merck KGaA ADR may not be well positioned to generate adequate gross income at this time. It has a very high probability of underperforming in January. Profitability indicators assess Merck KGaA's ability to earn profits and add value for shareholders.
For Merck KGaA profitability analysis, we use financial ratios and fundamental drivers that measure the ability of Merck KGaA to generate income relative to revenue, assets, operating costs, and current equity. These fundamental indicators attest to how well Merck KGaA ADR utilizes its assets to generate profit and value for its shareholders. The profitability module also shows relationships between Merck KGaA's most relevant fundamental drivers. It provides multiple suggestions of what could affect the performance of Merck KGaA ADR over time as well as its relative position and ranking within its peers.
  
Check out Correlation Analysis.
Please note, there is a significant difference between Merck KGaA's value and its price as these two are different measures arrived at by different means. Investors typically determine if Merck KGaA is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Merck KGaA's price is the amount at which it trades on the open market and represents the number that a seller and buyer find agreeable to each party.

Merck KGaA ADR Return On Asset vs. Operating Margin Fundamental Analysis

Comparative valuation techniques use various fundamental indicators to help in determining Merck KGaA's current stock value. Our valuation model uses many indicators to compare Merck KGaA value to that of its competitors to determine the firm's financial worth.
Merck KGaA ADR is considered to be number one stock in operating margin category among its peers. It also is considered to be number one stock in return on asset category among its peers reporting about  0.29  of Return On Asset per Operating Margin. The ratio of Operating Margin to Return On Asset for Merck KGaA ADR is roughly  3.48 . Comparative valuation analysis is a catch-all model that can be used if you cannot value Merck KGaA by discounting back its dividends or cash flows. This model doesn't attempt to find an intrinsic value for Merck KGaA's Pink Sheet. Still, instead, it compares the stock's price multiples to a benchmark or nearest competition to determine if the stock is relatively undervalued or overvalued.

Merck Return On Asset vs. Operating Margin

Operating Margin shows how much operating income a company makes on each dollar of sales. It is one of the profitability indicators which helps analysts to understand whether the firm is successful or not making money from everyday operations.

Merck KGaA

Operating Margin

 = 

Operating Income

Revenue

X

100

 = 
0.23 %
A good Operating Margin is required for a company to be able to pay for its fixed costs or payout its debt, which implies that the higher the margin, the better. This ratio is most effective in evaluating the earning potential of a company over time when comparing it against a firm's competitors.
Return on Asset or ROA shows how effective is the management of the company in generating income from utilizing all of the assets at their disposal. It is a useful ratio to evaluate the performance of different departments of a company as well as to understand management performance over time.

Merck KGaA

Return On Asset

 = 

Net Income

Total Assets

 = 
0.0656
Return on Asset measures overall efficiency of a company in generating profits from its total assets. It is expressed as the percentage of profits earned per dollar of Asset. A low ROA typically means that a company is asset-intensive and therefore will needs more money to continue generating revenue in the future.

Merck Return On Asset Comparison

Merck KGaA is currently under evaluation in return on asset category among its peers.

Merck KGaA Profitability Projections

The most important aspect of a successful company is its ability to generate a profit. For investors in Merck KGaA, profitability is also one of the essential criteria for including it into their portfolios because, without profit, Merck KGaA will eventually generate negative long term returns. The profitability progress is the general direction of Merck KGaA's change in net profit over the period of time. It can combine multiple indicators of Merck KGaA, where stable trends show no significant progress. An accelerating trend is seen as positive, while a decreasing one is unfavorable. A rising trend means that profits are rising, and operational efficiency may be rising as well. A decreasing trend is a sign of poor performance and may indicate upcoming losses.
MERCK Kommanditgesellschaft auf Aktien operates in the healthcare, life science, and electronics sectors worldwide. MERCK Kommanditgesellschaft auf Aktien is a subsidiary of E. Merck Kgaa operates under Drug ManufacturersSpecialty Generic classification in the United States and is traded on OTC Exchange. It employs 62770 people.

Merck Profitability Driver Comparison

Profitability drivers are factors that can directly affect your investment outlook on Merck KGaA. Investors often realize that things won't turn out the way they predict. There are maybe way too many unforeseen events and contingencies during the holding period of Merck KGaA position where the market behavior may be hard to predict, tax policy changes, gold or oil price hikes, calamities change, and many others. The question is, are you prepared for these unexpected events? Although some of these situations are obviously beyond your control, you can still follow the important profit indicators to know where you should focus on when things like this occur. Below are some of the Merck KGaA's important profitability drivers and their relationship over time.

Use Merck KGaA in pair-trading

One of the main advantages of trading using pair correlations is that every trade hedges away some risk. Because there are two separate transactions required, even if Merck KGaA position performs unexpectedly, the other equity can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Merck KGaA will appreciate offsetting losses from the drop in the long position's value.

Merck KGaA Pair Trading

Merck KGaA ADR Pair Trading Analysis

The ability to find closely correlated positions to Merck KGaA could be a great tool in your tax-loss harvesting strategies, allowing investors a quick way to find a similar-enough asset to replace Merck KGaA when you sell it. If you don't do this, your portfolio allocation will be skewed against your target asset allocation. So, investors can't just sell and buy back Merck KGaA - that would be a violation of the tax code under the "wash sale" rule, and this is why you need to find a similar enough asset and use the proceeds from selling Merck KGaA ADR to buy it.
The correlation of Merck KGaA is a statistical measure of how it moves in relation to other instruments. This measure is expressed in what is known as the correlation coefficient, which ranges between -1 and +1. A perfect positive correlation (i.e., a correlation coefficient of +1) implies that as Merck KGaA moves, either up or down, the other security will move in the same direction. Alternatively, perfect negative correlation means that if Merck KGaA ADR moves in either direction, the perfectly negatively correlated security will move in the opposite direction. If the correlation is 0, the equities are not correlated; they are entirely random. A correlation greater than 0.8 is generally described as strong, whereas a correlation less than 0.5 is generally considered weak.
Correlation analysis and pair trading evaluation for Merck KGaA can also be used as hedging techniques within a particular sector or industry or even over random equities to generate a better risk-adjusted return on your portfolios.
Pair CorrelationCorrelation Matching

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Additional Tools for Merck Pink Sheet Analysis

When running Merck KGaA's price analysis, check to measure Merck KGaA's market volatility, profitability, liquidity, solvency, efficiency, growth potential, financial leverage, and other vital indicators. We have many different tools that can be utilized to determine how healthy Merck KGaA is operating at the current time. Most of Merck KGaA's value examination focuses on studying past and present price action to predict the probability of Merck KGaA's future price movements. You can analyze the entity against its peers and the financial market as a whole to determine factors that move Merck KGaA's price. Additionally, you may evaluate how the addition of Merck KGaA to your portfolios can decrease your overall portfolio volatility.