Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Cambrex Corporation stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Cambrex has a trailing twelve months PE ratio of 17, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 21.4. If we focus on the long-term PE trend, Cambrex’s current PE level puts it below its midpoint over the past five years.
Further, the stock’s PE also compares favorably with the Zacks Medical - Biomedical and Genetics industry’s trailing twelve months PE ratio, which stands at 34.7. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Cambrex has a forward PE ratio (price relative to this year’s earnings) of just 19.7, so it is fair to say that the stock price might appreciate in the near future.
PEG Ratio
While earnings are certainly important, it is essential to know how much you are paying for the growth of earnings as well. One can easily do that with the PEG ratio (ratio of the P/E to the expected future earnings growth rate).The PEG ratio gives a more complete picture of the valuation of a stock than the P/E ratio.
Cambrex’s PEG ratio stands at just 1.3, compared with the industry average of 3.7. This suggests a decent undervalued trading relative to its earnings growth potential right now.
Broad Value Outlook
In aggregate, Cambrex currently has a Value Score of A, putting it into the top 20% of all stocks we cover from this look. This makes Cambrex a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for Cambrex is just 1.3, a level that is lower than the industry average of 1.5. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Clearly, CBM is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Cambrex might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth Score of A and a Momentum Score of F. This gives CBM a Zacks VGM score — or its overarching fundamental grade — of A. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been mixed at best. The current quarter consensus estimate has fallen by 34% in the past two months, while the full year estimate has inched up by 1.8%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Cambrex Corporation Price and Consensus
This somewhat mixed trend is why the stock has just a Zacks Rank #3 (Hold) and why we are looking for in-line performance from the company in the near term.
Bottom Line
Cambrex is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. However, with a sluggish industry rank (Bottom 29% out of more than 250 industries) and a Zacks Rank #3, it is hard to get too excited about this company overall. In fact, over the past two years, the industry has clearly underperformed the broader market, as you can see below:
So, value investors might want to wait for estimates, analyst sentiment and broader factors to turn around in this name first, but once that happens, this stock could be a compelling pick.
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Should Value Investors Pick Cambrex (CBM) Stock?
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Cambrex Corporation stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Cambrex has a trailing twelve months PE ratio of 17, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 21.4. If we focus on the long-term PE trend, Cambrex’s current PE level puts it below its midpoint over the past five years.
Further, the stock’s PE also compares favorably with the Zacks Medical - Biomedical and Genetics industry’s trailing twelve months PE ratio, which stands at 34.7. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Cambrex has a forward PE ratio (price relative to this year’s earnings) of just 19.7, so it is fair to say that the stock price might appreciate in the near future.
PEG Ratio
While earnings are certainly important, it is essential to know how much you are paying for the growth of earnings as well. One can easily do that with the PEG ratio (ratio of the P/E to the expected future earnings growth rate).The PEG ratio gives a more complete picture of the valuation of a stock than the P/E ratio.
Cambrex’s PEG ratio stands at just 1.3, compared with the industry average of 3.7. This suggests a decent undervalued trading relative to its earnings growth potential right now.
Broad Value Outlook
In aggregate, Cambrex currently has a Value Score of A, putting it into the top 20% of all stocks we cover from this look. This makes Cambrex a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for Cambrex is just 1.3, a level that is lower than the industry average of 1.5. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Clearly, CBM is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Cambrex might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth Score of A and a Momentum Score of F. This gives CBM a Zacks VGM score — or its overarching fundamental grade — of A. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been mixed at best. The current quarter consensus estimate has fallen by 34% in the past two months, while the full year estimate has inched up by 1.8%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Cambrex Corporation Price and Consensus
Cambrex Corporation Price and Consensus | Cambrex Corporation Quote
This somewhat mixed trend is why the stock has just a Zacks Rank #3 (Hold) and why we are looking for in-line performance from the company in the near term.
Bottom Line
Cambrex is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. However, with a sluggish industry rank (Bottom 29% out of more than 250 industries) and a Zacks Rank #3, it is hard to get too excited about this company overall. In fact, over the past two years, the industry has clearly underperformed the broader market, as you can see below:
So, value investors might want to wait for estimates, analyst sentiment and broader factors to turn around in this name first, but once that happens, this stock could be a compelling pick.
Can Hackers Put Money INTO Your Portfolio?
Earlier this month, credit bureau Equifax announced a massive data breach affecting 2 out of every 3 Americans. The cybersecurity industry is expanding quickly in response to this and similar events. But some stocks are better investments than others.
Zacks has just released Cybersecurity! An Investor’s Guide to help Zacks.com readers make the most of the $170 billion per year investment opportunity created by hackers and other threats. It reveals 4 stocks worth looking into right away.
Download the new report now>>