ALXN vs. CBM: Which Stock Should Value Investors Buy 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.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks 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 only part of the picture for value investors.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their 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 10.50, while CBM has a forward P/E of 27.32. We also note that ALXN has a PEG ratio of 0.94. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. CBM currently has a PEG ratio of 2.73.
Another notable valuation metric for ALXN is its P/B ratio of 2.31. 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 2.99.
Based on these metrics and many more, ALXN holds a Value grade of B, while CBM has a Value grade of C.
ALXN is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that ALXN is likely the superior value 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.