ALXN or CBM: Which Is the Better Value Stock Right Now?
Investors interested in stocks from the Medical - Biomedical and Genetics sector have probably already heard of Alexion Pharmaceuticals (ALXN) and Cambrex (CBM). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Alexion Pharmaceuticals has a Zacks Rank of #2 (Buy), while Cambrex has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that ALXN has an improving earnings outlook. But this is only part of the picture for value investors.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
ALXN currently has a forward P/E ratio of 10.91, while CBM has a forward P/E of 29.13. We also note that ALXN has a PEG ratio of 0.93. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. CBM currently has a PEG ratio of 2.91.
Another notable valuation metric for ALXN is its P/B ratio of 2.39. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, CBM has a P/B of 2.97.
Based on these metrics and many more, ALXN holds a Value grade of B, while CBM has a Value grade of C.
ALXN sticks out from CBM in both our Zacks Rank and Style Scores models, so value investors will likely feel that ALXN is the better option right now.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.