Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.
NEW YORK (
) has been reiterated by TheStreet Ratings as a hold with a ratings score of C- . The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income and feeble growth in the company's earnings per share.
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Highlights from the ratings report include:
- The current debt-to-equity ratio, 0.60, is low and is below the industry average, implying that there has been successful management of debt levels. Along with this, the company maintains a quick ratio of 3.72, which clearly demonstrates the ability to cover short-term cash needs.
- Net operating cash flow has significantly increased by 147.02% to $105.96 million when compared to the same quarter last year. In addition, VERTEX PHARMACEUTICALS INC has also vastly surpassed the industry average cash flow growth rate of 19.00%.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. When compared to other companies in the Biotechnology industry and the overall market, VERTEX PHARMACEUTICALS INC's return on equity has significantly outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- VERTEX PHARMACEUTICALS INC has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, VERTEX PHARMACEUTICALS INC turned its bottom line around by earning $0.04 versus -$3.77 in the prior year. For the next year, the market is expecting a contraction of 550.0% in earnings (-$0.18 versus $0.04).
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Biotechnology industry. The net income has significantly decreased by 126.0% when compared to the same quarter one year ago, falling from $221.11 million to -$57.54 million.
Vertex Pharmaceuticals Incorporated engages in discovering, developing, manufacturing, and commercializing small molecule drugs for the treatment of serious diseases worldwide. Vertex has a market cap of $10.04 billion and is part of the health care sector and drugs industry. The company has a P/E ratio of 75.5, above the S&P 500 P/E ratio of 17.7. Shares are up 10.5% year to date as of the close of trading on Friday.
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--Written by a member of TheStreet Ratings Staff.
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