Investors interested in stocks from the Medical - Biomedical and Genetics sector have probably already heard of Cambrex (CBM) and Alkermes (ALKS). But which of these two stocks presents investors with the better value opportunity right now? Let's 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 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). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that CBM is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their 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.
CBM currently has a forward P/E ratio of 19.92, while ALKS has a forward P/E of 67.83. We also note that CBM has a PEG ratio of 1.99. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. ALKS currently has a PEG ratio of 2.93.
Another notable valuation metric for CBM is its P/B ratio of 2.10. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, ALKS has a P/B of 3.33.
Based on these metrics and many more, CBM holds a Value grade of B, while ALKS has a Value grade of D.
CBM 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 CBM is likely the superior value option right now.
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Cambrex Corporation (CBM) : Free Stock Analysis Report
Alkermes plc (ALKS) : Free Stock Analysis Report
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