CELG vs. VRTX: Which Stock Should Value Investors Buy Now?
Investors looking for stocks in the Medical - Biomedical and Genetics sector might want to consider either Celgene (CELG) or Vertex Pharmaceuticals (VRTX). But which of these two companies is the best option for those looking for undervalued stocks? 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.
Currently, Celgene has a Zacks Rank of #2 (Buy), while Vertex Pharmaceuticals 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 CELG is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle for value investors.
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 highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
CELG currently has a forward P/E ratio of 9.60, while VRTX has a forward P/E of 49.45. We also note that CELG has a PEG ratio of 0.44. 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. VRTX currently has a PEG ratio of 1.25.
Another notable valuation metric for CELG is its P/B ratio of 17.28. 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, VRTX has a P/B of 17.46.
These metrics, and several others, help CELG earn a Value grade of A, while VRTX has been given a Value grade of D.
CELG sticks out from VRTX in both our Zacks Rank and Style Scores models, so value investors will likely feel that CELG is the better option right now.
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Celgene Corporation (CELG) : Free Stock Analysis Report
Vertex Pharmaceuticals Incorporated (VRTX) : Free Stock Analysis Report
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