ALXN vs. CBM: Which Stock Is the Better Value Option?
Investors with an interest in Medical - Biomedical and Genetics stocks have likely encountered both Alexion Pharmaceuticals (ALXN) and Cambrex (CBM). But which of these two stocks presents investors with the better value opportunity right now? Let's 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 and Cambrex are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that ALXN likely has seen a stronger improvement to its earnings outlook than CBM has recently. But this is just one piece of the puzzle for value investors.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
ALXN currently has a forward P/E ratio of 11.65, while CBM has a forward P/E of 29. We also note that ALXN has a PEG ratio of 1. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. CBM currently has a PEG ratio of 2.90.
Another notable valuation metric for ALXN is its P/B ratio of 2.54. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, CBM has a P/B of 2.95.
Based on these metrics and many more, ALXN holds a Value grade of B, while CBM has a Value grade of C.
ALXN has seen stronger estimate revision activity and sports more attractive valuation metrics than CBM, so it seems like value investors will conclude that ALXN is the superior option right now.
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