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CBM vs. ALKS: Which Stock Should Value Investors Buy Now?

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Investors interested in Medical - Biomedical and Genetics stocks are likely familiar with Cambrex and Alkermes (ALKS - Free Report) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. 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.

Cambrex has a Zacks Rank of #1 (Strong Buy), while Alkermes has a Zacks Rank of #3 (Hold) right now. This means that CBM's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. 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 21.53, while ALKS has a forward P/E of 62.64. We also note that CBM has a PEG ratio of 2.15. 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 2.71.

Another notable valuation metric for CBM is its P/B ratio of 2.26. 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 3.08.

These are just a few of the metrics contributing to CBM's Value grade of B and ALKS's 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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