Vertex Pharmaceuticals trades at $469.50 and has moved in lockstep with the market. Its shares have returned 6.5% over the last six months while the S&P 500 has gained 5.4%.

Is now the time to buy Vertex Pharmaceuticals, or should you be careful about including it in your portfolio? Get the full breakdown from our expert analysts, it’s free.

Why Is Vertex Pharmaceuticals Not Exciting?

We're sitting this one out for now. Here are three reasons why there are better opportunities than VRTX and a stock we'd rather own.

1. EPS Trending Down

We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.

Sadly for Vertex Pharmaceuticals, its EPS declined by 15.6% annually over the last five years while its revenue grew by 18.2%. This tells us the company became less profitable on a per-share basis as it expanded.

2. Free Cash Flow Margin Dropping

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

As you can see below, Vertex Pharmaceuticals’s margin dropped by 58.8 percentage points over the last five years. If its declines continue, it could signal increasing investment needs and capital intensity. Vertex Pharmaceuticals’s free cash flow margin for the trailing 12 months was negative 11.3%.

3. New Investments Fail to Bear Fruit as ROIC Declines

A company’s ROIC, or return on invested capital, shows how much operating profit it makes compared to the money it has raised (debt and equity).

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Unfortunately, Vertex Pharmaceuticals’s ROIC has decreased significantly over the last few years. We like what management has done in the past, but its declining returns are perhaps a symptom of fewer profitable growth opportunities.

Final Judgment

Vertex Pharmaceuticals’s business quality ultimately falls short of our standards. That said, the stock currently trades at 25.3× forward P/E (or $469.50 per share). This multiple tells us a lot of good news is priced in - we think other companies feature superior fundamentals at the moment. We’d recommend looking at a safe-and-steady industrials business benefiting from an upgrade cycle.

Stocks We Would Buy Instead of Vertex Pharmaceuticals

Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.

The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.

StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.