Investors looking for stocks in the Medical - Biomedical and Genetics sector might want to consider either Cambrex (CBM) or Alkermes (ALKS). 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, Cambrex has a Zacks Rank of #1 (Strong Buy), while Alkermes has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that CBM has an improving earnings outlook. But this is only part of the picture 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.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
CBM currently has a forward P/E ratio of 15.26, while ALKS has a forward P/E of 51.37. We also note that CBM has a PEG ratio of 1.53. 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. ALKS currently has a PEG ratio of 3.42.
Another notable valuation metric for CBM is its P/B ratio of 2.25. 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, ALKS has a P/B of 4.22.
These metrics, and several others, help CBM earn a Value grade of B, while ALKS has been given a Value grade of D.
CBM stands above ALKS thanks to its solid earnings outlook, and based on these valuation figures, we also feel that CBM is the superior value option right now.
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Cambrex Corporation (CBM) : Free Stock Analysis Report
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