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VRTX vs. PRTA: Which Stock Should Value Investors Buy Now?

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Investors interested in stocks from the Medical - Biomedical and Genetics sector have probably already heard of Vertex Pharmaceuticals (VRTX - Free Report) and Prothena (PRTA - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great 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, both Vertex Pharmaceuticals and Prothena are holding a Zacks Rank of # 2 (Buy). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. 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.

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.

VRTX currently has a forward P/E ratio of 14.90, while PRTA has a forward P/E of 52.53. We also note that VRTX has a PEG ratio of 1.52. 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. PRTA currently has a PEG ratio of 22.54.

Another notable valuation metric for VRTX is its P/B ratio of 5.20. 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, PRTA has a P/B of 11.66.

These are just a few of the metrics contributing to VRTX's Value grade of B and PRTA's Value grade of F.

Both VRTX and PRTA are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that VRTX is the superior value option right now.


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Vertex Pharmaceuticals Incorporated (VRTX) - free report >>

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