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

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Investors interested in Medical - Biomedical and Genetics stocks are likely familiar with 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 is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

Currently, Vertex Pharmaceuticals has a Zacks Rank of #2 (Buy), while Prothena 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 VRTX 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 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.

VRTX currently has a forward P/E ratio of 14.52, while PRTA has a forward P/E of 48.40. We also note that VRTX has a PEG ratio of 1.48. 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 20.77.

Another notable valuation metric for VRTX is its P/B ratio of 5.07. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, PRTA has a P/B of 10.64.

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

VRTX sticks out from PRTA in both our Zacks Rank and Style Scores models, so value investors will likely feel that VRTX is the better option right now.


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Vertex Pharmaceuticals Incorporated (VRTX) - free report >>

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