Revenue minus cost of goods sold. Graham's ≥40% threshold identifies businesses with durable pricing power. Note: software and financial companies naturally exceed this; retailers and manufacturers rarely reach it due to their cost structures.
Operating Margin37.9%
Profit after operating costs before interest and taxes. A consistent ≥15% operating margin signals a business with real competitive advantages. Capital-intensive industries (airlines, auto, commodities) rarely hit this threshold due to their structural cost base — compare within industry for context.
Net Income Margin32.9%
Bottom-line profit as a percentage of revenue. The ≥20% target reflects Buffett's preference for highly profitable businesses. Financial engineering (buybacks, tax optimisation) can inflate this temporarily — look for consistency across multiple years rather than a single strong result.
Financial Health
A
Years to Pay Off Debt0.5 yrs
Total Debt ÷ Net Income. Lower = stronger balance sheet. Important caveat: utilities, telecoms, REITs, and infrastructure companies carry large structural debt by design — their bond-like cash flows service it comfortably at ratios that would alarm Graham. Compare within sector.
Working Capital vs Long-Term Debt$5.4B
Working Capital minus Long-Term Debt. Negative results are common and expected in capital-return-focused businesses like Apple, Domino's, and McDonald's — where aggressive buybacks and dividends intentionally reduce book equity. This does not indicate financial distress in high-FCF businesses.
Working Capital$7.3B
Current Assets minus Current Liabilities. Negative working capital can be a deliberate efficiency strategy in businesses that collect cash before paying suppliers (retailers, fast food franchises, subscription businesses). Assess alongside free cash flow generation for full context.
Valuation
F
Margin of Safety0.0%
How far below the Graham Number the stock trades. Graham required a 33% discount as a buffer against analytical error. However, the Graham Number itself assumes 1960s-era P/E and P/B norms — for modern asset-light businesses it often understates true intrinsic value, making 0% MoS appear misleadingly bad.
Price-to-Book6.41x
Market price vs book value per share. Rarely below 1.5x for quality businesses today. Intangible assets (brand, software, patents) don't appear on the balance sheet under accounting rules, making P/B artificially high for asset-light companies like software and consumer brands.
Cash Flow
A
Free Cash Flow$3.2B
Operating cash flow minus capital expenditures. Buffett's most important metric — cash a business actually generates for its owners after maintaining and growing its asset base. Consistently positive FCF is one of the strongest indicators of a durable, well-run business regardless of accounting profits.
CapEx % of Net Income11.1%
Capital expenditure as a share of net income. Low CapEx signals a capital-light business that doesn't need heavy reinvestment to sustain earnings — Buffett's ideal. High CapEx is structurally necessary in manufacturing, airlines, telecoms, and semiconductors. For these industries, a high reading reflects the business model, not poor management.
Owner Earnings$4.6B
Net Income + Depreciation & Amortisation − Capital Expenditures. Buffett's preferred measure of a company's true annual earning power — what could theoretically be distributed to owners without impairing the business. More reliable than reported EPS because it accounts for the capital cost of maintaining the business.
About Vertex Pharmaceuticals Incorporated
Vertex Pharmaceuticals Incorporated operates as a biotechnology company in the United States, Europe, and internationally. The company offers transformative medicines for people with serious diseases with a focus on specialty markets, such as cystic fibrosis (CF), sickle cell disease (SCD), transfusion dependent beta thalassemia (TDT), and acute pain. It markets TRIKAFTA/KAFTRIO for people with CF with at least one F508del mutation for 2 years of age and older; ALYFTREK for the treatment for people with CF 6 years of age and older; SYMDEKO/SYMKEVI for treatment of patients with CF 6 years of age and older; ORKAMBI for CF patients 1 year or older; and KALYDECO for the treatment of patients with 1 month or older who have CF with ivacaftor. The company also develops CASGEVY for the treatment of SCD and TDT; JOURNAVX for the treatment of acute pain in adults; VX-522, a CFTR mRNA therapeutic designed to treat the underlying cause of CF, which is in Phase 1/2 clinical trial; inaxaplin for the treatment of APOL1-mediated kidney disease, which is in single Phase 2 trial; VX-264 for treating Type 1 Diabetes; VX-670 for the treatment of myotonic dystrophy type 1; and VX-407, a small molecule corrector for the treatment of autosomal dominant polycystic kidney disease. The company sells its products primarily to specialty pharmacy and distributors, wholesalers, retail pharmacies, hospitals, and clinics. Vertex Pharmaceuticals Incorporated has a strategic collaboration with AbCellera Biologics Inc. to research, develop, manufacture, and commercialize multispecific T-cell engagers (TCEs) for autoimmune diseases and other conditions. Vertex Pharmaceuticals Incorporated was founded in 1989 and is headquartered in Boston, Massachusetts.
Vertex Pharmaceuticals Incorporated operates as a biotechnology company in the United States, Europe, and internationally. The company offers transformative medicines for people with serious diseases with a focus on specialty markets, such as cystic fibrosis (CF), sickle cell disease (SCD), transfusion dependent beta thalassemia (TDT), and acute pain. It markets TRIKAFTA/KAFTRIO for people with CF with at least one F508del mutation for 2 years of age and older; ALYFTREK for the treatment for people with CF 6 years of age and older; SYMDEKO/SYMKEVI for treatment of patients with CF 6 years of age and older; ORKAMBI for CF patients 1 year or older; and KALYDECO for the treatment of patients with 1 month or older who have CF with ivacaftor. The company also develops CASGEVY for the treatment of SCD and TDT; JOURNAVX for the treatment of acute pain in adults; VX-522, a CFTR mRNA therapeutic designed to treat the underlying cause of CF, which is in Phase 1/2 clinical trial; inaxaplin for the treatment of APOL1-mediated kidney disease, which is in single Phase 2 trial; VX-264 for treating Type 1 Diabetes; VX-670 for the treatment of myotonic dystrophy type 1; and VX-407, a small molecule corrector for the treatment of autosomal dominant polycystic kidney disease. The company sells its products primarily to specialty pharmacy and distributors, wholesalers, retail pharmacies, hospitals, and clinics. Vertex Pharmaceuticals Incorporated has a strategic collaboration with AbCellera Biologics Inc. to research, develop, manufacture, and commercialize multispecific T-cell engagers (TCEs) for autoimmune diseases and other conditions. Vertex Pharmaceuticals Incorporated was founded in 1989 and is headquartered in Boston, Massachusetts.
Metric Explanations
What each dimension measures and where the thresholds come from.
Gross Profit Margin
Revenue minus cost of goods sold. Graham's ≥40% threshold identifies businesses with durable pricing power. Note: software and financial companies naturally exceed this; retailers and manufacturers rarely reach it due to their cost structures.
Operating Margin
Profit after operating costs before interest and taxes. A consistent ≥15% operating margin signals a business with real competitive advantages. Capital-intensive industries (airlines, auto, commodities) rarely hit this threshold due to their structural cost base — compare within industry for context.
Net Income Margin
Bottom-line profit as a percentage of revenue. The ≥20% target reflects Buffett's preference for highly profitable businesses. Financial engineering (buybacks, tax optimisation) can inflate this temporarily — look for consistency across multiple years rather than a single strong result.
Years to Pay Off Debt
Total Debt ÷ Net Income. Lower = stronger balance sheet. Important caveat: utilities, telecoms, REITs, and infrastructure companies carry large structural debt by design — their bond-like cash flows service it comfortably at ratios that would alarm Graham. Compare within sector.
Working Capital vs Long-Term Debt
Working Capital minus Long-Term Debt. Negative results are common and expected in capital-return-focused businesses like Apple, Domino's, and McDonald's — where aggressive buybacks and dividends intentionally reduce book equity. This does not indicate financial distress in high-FCF businesses.
Working Capital
Current Assets minus Current Liabilities. Negative working capital can be a deliberate efficiency strategy in businesses that collect cash before paying suppliers (retailers, fast food franchises, subscription businesses). Assess alongside free cash flow generation for full context.
Margin of Safety
How far below the Graham Number the stock trades. Graham required a 33% discount as a buffer against analytical error. However, the Graham Number itself assumes 1960s-era P/E and P/B norms — for modern asset-light businesses it often understates true intrinsic value, making 0% MoS appear misleadingly bad.
Price-to-Book
Market price vs book value per share. Rarely below 1.5x for quality businesses today. Intangible assets (brand, software, patents) don't appear on the balance sheet under accounting rules, making P/B artificially high for asset-light companies like software and consumer brands.
Free Cash Flow
Operating cash flow minus capital expenditures. Buffett's most important metric — cash a business actually generates for its owners after maintaining and growing its asset base. Consistently positive FCF is one of the strongest indicators of a durable, well-run business regardless of accounting profits.
CapEx % of Net Income
Capital expenditure as a share of net income. Low CapEx signals a capital-light business that doesn't need heavy reinvestment to sustain earnings — Buffett's ideal. High CapEx is structurally necessary in manufacturing, airlines, telecoms, and semiconductors. For these industries, a high reading reflects the business model, not poor management.
Owner Earnings
Net Income + Depreciation & Amortisation − Capital Expenditures. Buffett's preferred measure of a company's true annual earning power — what could theoretically be distributed to owners without impairing the business. More reliable than reported EPS because it accounts for the capital cost of maintaining the business.
Mr. Market is currently offering Vertex Pharmaceuticals Incorporated at $471.41.
The business passes only 2 of 7 of Graham's defensive criteria — well below his required standard.
At $471.41, the stock trades at a 196% premium to its Graham Number of $159.22. Graham would consider this price speculative.
There is no margin of safety at the current price. Graham would advise patience and waiting for a better entry point.
Trading at 28.3x NCAV. Expected for most quality businesses — NCAV was designed to find depression-era bargains and rarely applies to modern profitable companies..
Conclusion: By Graham's standards, this stock is speculative at its current price. The intelligent investor would look elsewhere or wait.
Showing Key Metrics
Income Highlights
Metric
2025
2024
2023
2022
2021
Gross Profit %
86.2%▲
86.1%▼
87.2%▼
87.9%•
N/A
Operating Margin %
37.9%▲
-2.1%▼
38.3%▼
47.6%•
N/A
Net Income %
32.9%▲
-4.9%▼
36.7%▼
37.2%•
N/A
Diluted EPS
15.32▲
-2.08▼
13.89▲
12.82•
N/A
Balance Sheet Highlights
Metric
2025
2024
2023
2022
Total Assets
$25.6B
$22.5B
$22.7B
$18.2B
Total Debt
$2.0B▲
$1.7B▲
$808M▼
$900M
Working Capital
$7.3B▲
$6.0B▼
$10.6B▲
$10.5B
Years to Pay Debt
0.51
-3.26
0.22
0.27
Cash Flow Highlights
Metric
2025
2024
2023
2022
2021
Free Cash Flow
$3.2B▲
-$978M▼
$3.3B▼
$3.9B•
N/A
Owner Earnings
$4.6B
$157M
$4.1B
$3.7B
N/A
CapEx % of Net Income
11.1%
N/A
7.1%
6.2%
N/A
Income Statement
2025
2024
2023
2022
2021
Tax Effect Of Unusual Items
-56,633
105
8,978
12,362
Tax Rate For Calcs
0
0
0
0
Normalized EBITDA
5,247,400
485,800
4,553,600
4,378,000
Total Unusual Items
-381,100
500
51,600
57,500
Total Unusual Items Excluding Goodwill
-381,100
500
51,600
57,500
Net Income From Continuing Operation Net Minority Interest
3,953,200
-535,600
3,619,600
3,322,000
Reconciled Depreciation
209,800
207,200
181,300
148,300
Reconciled Cost Of Revenue
1,651,300
1,530,500
1,262,200
1,080,300
EBITDA
4,866,300
486,300
4,605,200
4,435,500
EBIT
4,656,500
279,100
4,423,900
4,287,200
Net Interest Income
477,600
567,500
570,600
89,800
Interest Expense
13,300
30,600
44,100
54,800
Interest Income
490,900
598,100
614,700
144,600
Normalized Income
4,277,667
-535,995
3,576,978
3,276,862
Net Income From Continuing And Discontinued Operation
3,953,200
-535,600
3,619,600
3,322,000
Total Expenses
7,446,900
11,253,500
6,088,800
4,680,800
Total Operating Income As Reported
4,173,300
-232,900
3,832,000
4,307,400
Diluted Average Shares
258,000
257,900
260,500
259,100
Basic Average Shares
255,700
257,900
257,700
256,100
Diluted EPS
0
0
0
0
Basic EPS
0
0
0
0
Diluted NI Availto Com Stockholders
3,953,200
-535,600
3,619,600
3,322,000
Net Income Common Stockholders
3,953,200
-535,600
3,619,600
3,322,000
Net Income
3,953,200
-535,600
3,619,600
3,322,000
Net Income Including Noncontrolling Interests
3,953,200
-535,600
3,619,600
3,322,000
Net Income Continuous Operations
3,953,200
-535,600
3,619,600
3,322,000
Tax Provision
690,000
784,100
760,200
910,400
Pretax Income
4,643,200
248,500
4,379,800
4,232,400
Other Income Expense
-388,800
-85,600
28,800
-107,300
Other Non Operating Income Expenses
-7,700
-86,100
-22,800
-164,800
Special Income Charges
-381,100
500
51,600
57,500
Other Special Charges
4,628,400
527,100
115,500
1,113,300
Impairment Of Capital Assets
379,000
0
0
Restructuring And Mergern Acquisition
2,100
-500
-51,600
-57,500
Net Non Operating Interest Income Expense
477,600
567,500
570,600
89,800
Interest Expense Non Operating
13,300
30,600
44,100
54,800
Interest Income Non Operating
490,900
598,100
614,700
144,600
Operating Income
4,554,400
-233,400
3,780,400
4,249,900
Operating Expense
5,795,600
9,723,000
4,826,600
3,600,500
Research And Development
4,042,500
8,258,700
3,690,000
2,655,800
Selling General And Administration
1,753,100
1,464,300
1,136,600
944,700
Gross Profit
10,350,000
9,489,600
8,607,000
7,850,400
Cost Of Revenue
1,651,300
1,530,500
1,262,200
1,080,300
Total Revenue
12,001,300
11,020,100
9,869,200
8,930,700
Operating Revenue
11,970,600
11,020,100
9,869,200
8,930,700
Balance Sheet
2025
2024
2023
2022
Ordinary Shares Number
253,991
256,940
257,695
257,012
Share Issued
253,991
256,940
257,695
257,012
Total Debt
2,030,500
1,744,300
808,400
899,700
Tangible Book Value
17,153,600
14,495,700
15,652,500
12,221,100
Invested Capital
18,665,800
16,409,600
17,580,400
13,912,700
Working Capital
7,339,800
6,031,800
10,596,800
10,492,700
Net Tangible Assets
17,153,600
14,495,700
15,652,500
12,221,100
Capital Lease Obligations
2,030,500
1,744,300
808,400
899,700
Common Stock Equity
18,665,800
16,409,600
17,580,400
13,912,700
Total Capitalization
18,665,800
16,409,600
17,580,400
13,912,700
Total Equity Gross Minority Interest
18,665,800
16,409,600
17,580,400
13,912,700
Stockholders Equity
18,665,800
16,409,600
17,580,400
13,912,700
Gains Losses Not Affecting Retained Earnings
-15,900
127,800
-14,300
800
Other Equity Adjustments
-15,900
127,800
-14,300
800
Retained Earnings
13,560,000
9,606,800
10,142,400
6,522,800
Additional Paid In Capital
5,119,200
6,672,400
7,449,700
7,386,500
Capital Stock
2,500
2,600
2,600
2,600
Common Stock
2,500
2,600
2,600
2,600
Total Liabilities Net Minority Interest
6,977,200
6,123,600
5,149,800
4,238,200
Total Non Current Liabilities Net Minority Interest
3,116,000
2,559,000
1,602,400
1,496,100
Other Non Current Liabilities
267,400
203,200
196,300
233,000
Tradeand Other Payables Non Current
895,400
698,600
681,400
452,800
Long Term Debt And Capital Lease Obligation
1,953,200
1,657,200
724,700
810,300
Long Term Capital Lease Obligation
1,953,200
1,657,200
724,700
810,300
Current Liabilities
3,861,200
3,564,600
3,547,400
2,742,100
Other Current Liabilities
127,700
36,600
50,700
62,500
Current Deferred Liabilities
171,800
206,800
170,300
159,600
Current Deferred Revenue
171,800
206,800
170,300
159,600
Current Debt And Capital Lease Obligation
77,300
87,100
83,700
89,400
Current Capital Lease Obligation
77,300
87,100
83,700
89,400
Payables And Accrued Expenses
3,484,400
3,234,100
3,242,700
2,430,600
Current Accrued Expenses
2,591,400
2,356,500
2,318,200
1,788,400
Payables
893,000
877,600
924,500
642,200
Other Payable
328,200
303,500
460,100
215,000
Total Tax Payable
103,100
161,100
99,500
123,300
Accounts Payable
461,700
413,000
364,900
303,900
Total Assets
25,643,000
22,533,200
22,730,200
18,150,900
Total Non Current Assets
14,442,000
12,936,800
8,586,000
4,916,100
Other Non Current Assets
1,236,600
999,300
895,300
409,600
Non Current Deferred Assets
2,897,900
2,331,100
1,812,100
1,246,900
Non Current Deferred Taxes Assets
2,897,900
2,331,100
1,812,100
1,246,900
Investments And Advances
5,712,300
5,107,900
2,497,800
112,200
Investmentin Financial Assets
5,712,300
5,107,900
2,497,800
112,200
Available For Sale Securities
5,712,300
5,107,900
2,497,800
112,200
Goodwill And Other Intangible Assets
1,512,200
1,913,900
1,927,900
1,691,600
Other Intangible Assets
424,200
825,900
839,900
603,600
Goodwill
1,088,000
1,088,000
1,088,000
1,088,000
Net PPE
3,083,000
2,584,600
1,452,900
1,455,800
Accumulated Depreciation
-1,204,100
-1,064,800
-1,188,900
-1,027,300
Gross PPE
4,287,100
3,649,400
2,641,800
2,483,100
Leases
1,009,300
737,600
474,600
410,900
Other Properties
1,562,700
1,356,800
293,600
347,400
Machinery Furniture Equipment
1,198,200
1,060,700
911,900
788,600
Buildings And Improvements
483,800
461,200
928,600
903,100
Land And Improvements
33,100
33,100
33,100
33,100
Current Assets
11,201,000
9,596,400
14,144,200
13,234,800
Other Current Assets
110,900
76,400
84,300
74,400
Hedging Assets Current
6,200
130,100
1,800
47,500
Prepaid Assets
736,200
459,200
537,600
431,600
Inventory
1,686,800
1,205,400
738,800
460,600
Finished Goods
230,100
184,600
135,000
161,800
Work In Process
1,196,900
768,800
525,100
260,700
Raw Materials
259,800
252,000
78,700
38,100
Receivables
2,052,800
1,609,400
1,563,400
1,442,200
Accounts Receivable
2,052,800
1,609,400
1,563,400
1,442,200
Cash Cash Equivalents And Short Term Investments
6,608,100
6,115,900
11,218,300
10,778,500
Other Short Term Investments
1,523,300
1,546,300
849,200
274,500
Cash And Cash Equivalents
5,084,800
4,569,600
10,369,100
10,504,000
Cash Flow
2025
2024
2023
2022
2021
Free Cash Flow
3,193,800
-978,000
3,278,900
3,925,200
Repurchase Of Capital Stock
-2,387,300
-1,582,100
-653,700
-172,000
Repayment Of Debt
-5,400
-33,600
-44,900
-85,500
Issuance Of Debt
1,800
0
28,300
Capital Expenditure
-437,600
-485,400
-258,400
-204,700
Interest Paid Supplemental Data
12,400
30,500
43,100
52,300
Income Tax Paid Supplemental Data
1,566,700
1,082,100
1,677,300
1,057,800
End Cash Position
5,087,800
4,572,200
10,372,300
10,512,000
Beginning Cash Position
4,572,200
10,372,300
10,512,000
6,800,100
Effect Of Exchange Rate Changes
90,900
-42,600
26,900
-29,200
Changes In Cash
424,700
-5,757,500
-166,600
3,741,100
Financing Cash Flow
-2,261,300
-1,494,900
-562,200
-67,700
Cash Flow From Continuing Financing Activities
-2,261,300
-1,494,900
-562,200
-67,700
Net Other Financing Charges
3,700
6,200
1,800
3,500
Proceeds From Stock Option Exercised
127,700
114,600
134,600
186,300
Net Common Stock Issuance
-2,387,300
-1,582,100
-653,700
-172,000
Common Stock Payments
-2,387,300
-1,582,100
-653,700
-172,000
Net Issuance Payments Of Debt
-5,400
-33,600
-44,900
-85,500
Net Long Term Debt Issuance
-5,400
-33,600
-44,900
-85,500
Long Term Debt Payments
-5,400
-33,600
-44,900
-85,500
Long Term Debt Issuance
1,800
0
28,300
Investing Cash Flow
-945,400
-3,770,000
-3,141,700
-321,100
Cash Flow From Continuing Investing Activities
-945,400
-3,770,000
-3,141,700
-321,100
Net Other Investing Changes
-24,700
-54,000
-31,000
-47,800
Net Investment Purchase And Sale
-483,100
-3,230,600
-2,852,300
227,300
Sale Of Investment
5,913,400
4,465,600
934,200
920,000
Purchase Of Investment
-6,396,500
-7,696,200
-3,786,500
-692,700
Net Business Purchase And Sale
0
0
-295,900
0
Purchase Of Business
0
0
-295,900
0
Net Intangibles Purchase And Sale
0
-187,700
-58,000
0
Purchase Of Intangibles
0
-187,700
-58,000
0
Net PPE Purchase And Sale
-437,600
-297,700
-200,400
-204,700
Purchase Of PPE
-437,600
-297,700
-200,400
-204,700
Operating Cash Flow
3,631,400
-492,600
3,537,300
4,129,900
Cash Flow From Continuing Operating Activities
3,631,400
-492,600
3,537,300
4,129,900
Change In Working Capital
-1,199,100
-514,800
-265,700
340,800
Change In Other Current Liabilities
148,500
39,700
208,900
498,900
Change In Payables And Accrued Expense
-80,100
262,400
478,100
663,300
Change In Accrued Expense
-116,900
212,900
429,400
542,500
Change In Payable
36,800
49,500
48,700
120,800
Change In Account Payable
36,800
49,500
48,700
120,800
Change In Prepaid Assets
-396,000
-200,300
-545,700
-326,400
Change In Inventory
-524,200
-517,300
-322,900
-136,400
Change In Receivables
-347,300
-99,300
-84,100
-358,600
Changes In Account Receivables
-347,300
-99,300
-84,100
-358,600
Other Non Cash Items
113,400
900
-42,600
-45,700
Stock Based Compensation
685,900
698,500
581,200
491,300
Asset Impairment Charge
379,000
0
0
Deferred Tax
-510,800
-348,800
-536,500
-275,900
Deferred Income Tax
-510,800
-348,800
-536,500
-275,900
Depreciation Amortization Depletion
209,800
207,200
181,300
148,300
Depreciation And Amortization
209,800
207,200
181,300
148,300
Depreciation
148,300
125,600
Operating Gains Losses
57,700
600
149,100
-17,100
Gain Loss On Investment Securities
57,700
600
149,100
-17,100
Net Income From Continuing Operations
3,953,200
-535,600
3,619,600
3,322,000
2/7
Graham Score
Speculative Investor
Fails most of Graham's safety criteria. Treat with caution.
Graham's Fair Value
$159.22
Margin of Safety
0%
Market Cap / Net Assets
6.4x
Net Assets: $18.7B
Warren's Owner Earnings
$4.6B
Latest fiscal year
Graham's 7 Criteria
Defensive Investor Checklist
2/7 — Speculative Investor
✅
Adequate Size
Graham required companies large enough to withstand economic downturns. This threshold ($1.5B) is inflation-adjusted from Graham's original $100M — virtually all S&P 500 companies pass this today.
$12.0B
vs > $1.5B revenue
✅
Strong Financial Condition
Current assets must be at least twice current liabilities. Note: highly profitable companies (Apple, Domino's) often run negative or low working capital deliberately — they collect cash fast and stretch payables. A failing score here is not always a warning sign.
2.90x
vs Current Ratio > 2.0x
❌
Earnings Stability
Graham required uninterrupted positive earnings. Any loss year is a red flag for defensive investors. Growth companies and cyclicals may show occasional losses during investment cycles or downturns without being fundamentally unsound.
1 loss years (4 yrs data)
vs No negative EPS years
❌
Dividend Record
Graham valued dividends as evidence of financial discipline and shareholder alignment. Many excellent modern businesses (Alphabet, Amazon, Berkshire Hathaway) pay no dividend, preferring to reinvest cash at high rates of return. Failing this criterion does not indicate a poor business — it may indicate a high-growth one.
No dividend
vs Uninterrupted dividends
❌
Earnings Growth
EPS grew from $12.82 to $15.32 over 2 years. Graham's 33% threshold was set over a 10-year period. Measured over fewer years (as here), the bar is proportionally lower. Share buybacks can also inflate EPS growth without reflecting underlying business improvement.
+19.5% EPS growth
vs > 33% EPS growth
❌
Moderate P/E Ratio
Graham's 15x P/E threshold was calibrated to 1960s market averages when interest rates were higher. Today's lower rate environment structurally supports higher multiples — the S&P 500 long-run average P/E is now closer to 20–25x. A stock trading at 20x is not automatically speculative in the modern context.
28.0x
vs P/E ≤ 15.0x
❌
Moderate Price-to-Book
Graham's 1.5x P/B threshold made sense when most company value was tangible. Today, intangible assets — brand, software, patents, network effects — rarely appear on the balance sheet. A high P/B in tech, pharma, or consumer brands often reflects intangible value, not overvaluation. P/FCF or EV/EBITDA are more reliable for asset-light businesses.
6.41x P/B (P/E×P/B: 179.4)
vs P/B ≤ 1.5x | P/E × P/B ≤ 22.5
Graham's 7 Criteria — Explained
What each criterion measures and why it matters.
✅ Adequate Size — $12.0Bvs > $1.5B revenue
Graham required companies large enough to withstand economic downturns. This threshold ($1.5B) is inflation-adjusted from Graham's original $100M — virtually all S&P 500 companies pass this today.
"The minimum size of an enterprise should be not less than $100 million of annual sales."
✅ Strong Financial Condition — 2.90xvs Current Ratio > 2.0x
Current assets must be at least twice current liabilities. Note: highly profitable companies (Apple, Domino's) often run negative or low working capital deliberately — they collect cash fast and stretch payables. A failing score here is not always a warning sign.
"For industrial companies, current assets should be at least twice current liabilities."
❌ Earnings Stability — 1 loss years (4 yrs data)vs No negative EPS years
Graham required uninterrupted positive earnings. Any loss year is a red flag for defensive investors. Growth companies and cyclicals may show occasional losses during investment cycles or downturns without being fundamentally unsound.
"The company should have shown no deficit in the past ten years."
❌ Dividend Record — No dividendvs Uninterrupted dividends
Graham valued dividends as evidence of financial discipline and shareholder alignment. Many excellent modern businesses (Alphabet, Amazon, Berkshire Hathaway) pay no dividend, preferring to reinvest cash at high rates of return. Failing this criterion does not indicate a poor business — it may indicate a high-growth one.
"Some current dividend payments — for at least the past 20 years."
EPS grew from $12.82 to $15.32 over 2 years. Graham's 33% threshold was set over a 10-year period. Measured over fewer years (as here), the bar is proportionally lower. Share buybacks can also inflate EPS growth without reflecting underlying business improvement.
"A minimum increase of at least one-third in per-share earnings over ten years."
❌ Moderate P/E Ratio — 28.0xvs P/E ≤ 15.0x
Graham's 15x P/E threshold was calibrated to 1960s market averages when interest rates were higher. Today's lower rate environment structurally supports higher multiples — the S&P 500 long-run average P/E is now closer to 20–25x. A stock trading at 20x is not automatically speculative in the modern context.
"The price-earnings ratio should be no more than 15 times average earnings."
Graham's 1.5x P/B threshold made sense when most company value was tangible. Today, intangible assets — brand, software, patents, network effects — rarely appear on the balance sheet. A high P/B in tech, pharma, or consumer brands often reflects intangible value, not overvaluation. P/FCF or EV/EBITDA are more reliable for asset-light businesses.
"The price should not be more than 1½ times book value. P/E × P/B ≤ 22.5."
These metrics estimate what Vertex Pharmaceuticals Incorporated is worth based on fundamentals — independent of what the market prices it at.
Graham's Fair Value and NCAV are conservative floors.
EPV assumes zero growth. These are reference points, not price targets.
Net Current Asset Value
$16.64
Trading at 28.3x NCAV. Expected for most quality businesses — NCAV was designed to find depression-era bargains and rarely applies to modern profitable companies.
"Buy at two-thirds of net current assets." — Graham
Earnings Power Value
$199.38
Per share, no-growth floor. Compare to current price.
ROIC — Return on Invested Capital
16.5%
Return on Invested Capital — Buffett's preferred measure for asset-light businesses. ROIC > 15% consistently signals a durable competitive advantage (moat). More meaningful than P/B for software, pharma, and consumer brand companies where most value is intangible and off-balance-sheet.
"The management of a business is its most important single factor — more important than market position, patents, or financial structure."
— Benjamin Graham
Capital Allocation & Alignment
Insider Ownership
0.21%
Low — management has little skin in the game
Return on Equity (ROE)
21.2%
Excellent — management generates strong returns on equity
Return on Assets (ROA)
15.4%
Strong — management uses assets efficiently
Share Buybacks (Latest Year)
$2.4B
Management is returning capital to shareholders via buybacks
Debt Trend YoY
+16.4% YoY
Debt is growing — management is leveraging up
Leadership Team
Jeffrey Marc Leiden , Ph.
Executive Chairman
Age 69
Reshma Kewalramani FASN,
CEO, President & Director
Age 52
Pay: $6,141,991
0.155% of net income
Charles Wagner Jr.
Executive VP, COO & CFO
Age 57
Pay: $2,990,992
0.076% of net income
Susie Lisa
Senior Vice President of Investor Relations
Top Institutional Holders
Institution
% Owned
Shares
Capital World Investors
10.00%
25,368,124
Blackrock Inc.
9.44%
23,969,517
Capital Research Global Investors
8.32%
21,125,964
Vanguard Capital Management LLC
6.51%
16,512,810
State Street Corporation
4.62%
11,730,139
Invesco Ltd.
3.11%
7,892,611
JPMORGAN CHASE & CO
2.77%
7,033,156
Geode Capital Management, LLC
2.42%
6,139,621
Risk Analysis
Beta (Market Risk)
0.30
Low volatility — more stable than the market
Short Interest
2.2% of float
Low short interest — market is not heavily bearish
Debt-to-Equity
0.10x
Conservative balance sheet — low financial risk
Current Ratio
3.02x
Strong liquidity — Graham approved
52-Week Price Range
Low: $362.50Current: $471.41High: $533.67
Currently at 64% of 52-week range
Vertex Pharmaceuticals Incorporated (VRTX) fundamental analysis — Overall grade B based on profitability, financial health, valuation and cash flow. Graham's
Fair Value: $159.22. Margin of safety: 0%. Gross profit margin: 86.2%. Operating margin: 37.9%. Net margin: 32.9%. Market cap: $119.6B. Sector: Healthcare. Industry: Biotechnology. Analysis powered by 360investing — free fundamental stock analysis based on Benjamin Graham and Warren Buffett
principles.
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