Investors looking for stocks in the Medical - Biomedical and Genetics sector might want to consider either Gilead Sciences (GILD) or Vertex Pharmaceuticals (VRTX). But which of these two stocks presents investors with the better value opportunity right now? 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Gilead Sciences and Vertex Pharmaceuticals are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that GILD's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their 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.

GILD currently has a forward P/E ratio of 14.49, while VRTX has a forward P/E of 28.07. We also note that GILD has a PEG ratio of 0.74. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. VRTX currently has a PEG ratio of 1.20.

Another notable valuation metric for GILD is its P/B ratio of 7.38. 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, VRTX has a P/B of 7.78.

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

GILD stands above VRTX thanks to its solid earnings outlook, and based on these valuation figures, we also feel that GILD is the superior value option right now.

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Gilead Sciences, Inc. (GILD) : Free Stock Analysis Report

Vertex Pharmaceuticals Incorporated (VRTX) : Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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