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 Margin38.1%
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 Margin34.5%
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 Debt1.9 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$5.9B
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$7.8B
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-Book5.92x
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$1.3B
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 Income12.9%
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$1.2B
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 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 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 $451.63.
The business passes only 2 of 7 of Graham's defensive criteria — well below his required standard.
At $451.63, the stock trades at a 444% premium to its Graham Number of $83.07. 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 24.9x 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
Q1 2026
Q4 2025
Q4 2024
Gross Profit %
86.8%▲
85.4%•
N/A
Operating Margin %
38.1%▲
35.4%•
N/A
Net Income %
34.5%▼
37.3%•
N/A
Diluted EPS
4.02▼
4.65•
N/A
Balance Sheet Highlights
Metric
Q1 2026
Q4 2025
Q4 2024
Total Assets
$26.5B
$25.6B
N/A
Total Debt
$2.0B▼
$2.0B•
N/A
Working Capital
$7.8B▲
$7.3B•
N/A
Years to Pay Debt
1.93
1.70
N/A
Cash Flow Highlights
Metric
Q1 2026
Q4 2025
Q4 2024
Free Cash Flow
$1.3B▲
$349M•
N/A
Owner Earnings
$1.2B
$1.4B
N/A
CapEx % of Net Income
12.9%
12.5%
N/A
Income Statement
2026
2025
2024
Tax Effect Of Unusual Items
-124
7,946
Tax Rate For Calcs
0
0
Normalized EBITDA
1,195,400
1,314,400
Total Unusual Items
-700
75,600
Total Unusual Items Excluding Goodwill
-700
75,600
Net Income From Continuing Operation Net Minority Interest
1,031,400
1,191,100
Reconciled Depreciation
55,900
55,700
Reconciled Cost Of Revenue
392,800
466,000
EBITDA
1,194,700
1,390,000
EBIT
1,138,800
1,334,300
Net Interest Income
114,800
118,600
Interest Expense
3,300
2,800
Interest Income
114,800
121,900
Normalized Income
1,031,976
1,123,446
Net Income From Continuing And Discontinued Operation
1,031,400
1,191,100
Total Expenses
1,848,100
2,059,700
Total Operating Income As Reported
1,138,100
1,205,900
Diluted Average Shares
256,300
256,100
Basic Average Shares
254,100
253,900
Diluted EPS
0
0
Basic EPS
0
0
Diluted NI Availto Com Stockholders
1,031,400
1,191,100
Net Income Common Stockholders
1,031,400
1,191,100
Net Income
1,031,400
1,191,100
Net Income Including Noncontrolling Interests
1,031,400
1,191,100
Net Income Continuous Operations
1,031,400
1,191,100
Tax Provision
221,500
139,900
Pretax Income
1,252,900
1,331,000
Other Income Expense
-700
82,100
Other Non Operating Income Expenses
6,500
-14,900
Special Income Charges
-700
75,600
Other Special Charges
500
87,500
Impairment Of Capital Assets
0
0
Restructuring And Mergern Acquisition
200
900
Net Non Operating Interest Income Expense
114,800
118,600
Interest Expense Non Operating
3,300
2,800
Interest Income Non Operating
114,800
121,900
Operating Income
1,138,800
1,130,300
Operating Expense
1,455,300
1,593,700
Research And Development
961,600
1,106,700
Selling General And Administration
493,700
487,000
Gross Profit
2,594,100
2,724,000
Cost Of Revenue
392,800
466,000
Total Revenue
2,986,900
3,190,000
Operating Revenue
2,986,900
3,190,000
Balance Sheet
2026
2025
2024
Ordinary Shares Number
254,164
253,991
Share Issued
254,164
253,991
Total Debt
1,986,500
2,030,500
Tangible Book Value
17,855,400
17,153,600
Invested Capital
19,361,900
18,665,800
Working Capital
7,849,700
7,339,800
Net Tangible Assets
17,855,400
17,153,600
Capital Lease Obligations
1,986,500
2,030,500
Common Stock Equity
19,361,900
18,665,800
Total Capitalization
19,361,900
18,665,800
Total Equity Gross Minority Interest
19,361,900
18,665,800
Stockholders Equity
19,361,900
18,665,800
Gains Losses Not Affecting Retained Earnings
24,800
-15,900
Other Equity Adjustments
24,800
-15,900
Retained Earnings
14,591,400
13,560,000
Additional Paid In Capital
4,743,200
5,119,200
Capital Stock
2,500
2,500
Common Stock
2,500
2,500
Total Liabilities Net Minority Interest
7,122,500
6,977,200
Total Non Current Liabilities Net Minority Interest
3,241,900
3,116,000
Other Non Current Liabilities
1,255,400
267,400
Tradeand Other Payables Non Current
895,400
698,600
Long Term Debt And Capital Lease Obligation
1,986,500
1,953,200
Long Term Capital Lease Obligation
1,986,500
1,953,200
Current Liabilities
3,880,600
3,861,200
Other Current Liabilities
407,100
127,700
Current Deferred Liabilities
171,800
206,800
Current Deferred Revenue
171,800
206,800
Current Debt And Capital Lease Obligation
77,300
87,100
Current Capital Lease Obligation
77,300
87,100
Payables And Accrued Expenses
3,473,500
3,484,400
Current Accrued Expenses
2,984,200
2,591,400
Payables
489,300
893,000
Other Payable
328,200
303,500
Total Tax Payable
103,100
161,100
Accounts Payable
489,300
461,700
Total Assets
26,484,400
25,643,000
Total Non Current Assets
14,754,100
14,442,000
Other Non Current Assets
1,256,400
1,236,600
Non Current Deferred Assets
2,947,800
2,897,900
Non Current Deferred Taxes Assets
2,947,800
2,897,900
Investments And Advances
5,749,900
5,712,300
Investmentin Financial Assets
5,749,900
5,712,300
Available For Sale Securities
5,749,900
5,712,300
Goodwill And Other Intangible Assets
1,506,500
1,512,200
Other Intangible Assets
418,500
424,200
Goodwill
1,088,000
1,088,000
Net PPE
3,293,500
3,083,000
Accumulated Depreciation
-1,204,100
-1,064,800
Gross PPE
3,293,500
4,287,100
Leases
1,009,300
737,600
Other Properties
3,293,500
1,562,700
Machinery Furniture Equipment
1,198,200
1,060,700
Buildings And Improvements
483,800
461,200
Land And Improvements
33,100
33,100
Current Assets
11,730,300
11,201,000
Other Current Assets
720,800
110,900
Hedging Assets Current
6,200
130,100
Prepaid Assets
736,200
459,200
Inventory
1,766,700
1,686,800
Finished Goods
255,900
230,100
Work In Process
1,243,400
1,196,900
Raw Materials
267,400
259,800
Receivables
1,996,100
2,052,800
Accounts Receivable
1,996,100
2,052,800
Cash Cash Equivalents And Short Term Investments
7,246,700
6,608,100
Other Short Term Investments
1,753,800
1,523,300
Cash And Cash Equivalents
5,492,900
5,084,800
Cash Flow
2026
2025
2024
Free Cash Flow
1,294,700
348,600
Repurchase Of Capital Stock
-565,400
-130,900
Repayment Of Debt
-1,400
-1,300
Capital Expenditure
-133,400
-149,400
Interest Paid Supplemental Data
3,200
3,000
Income Tax Paid Supplemental Data
82,300
389,400
End Cash Position
5,504,900
5,087,800
Beginning Cash Position
5,087,800
4,947,800
Effect Of Exchange Rate Changes
-40,300
7,300
Changes In Cash
457,400
132,700
Financing Cash Flow
-538,800
-77,200
Cash Flow From Continuing Financing Activities
-538,800
-77,200
Net Other Financing Charges
-400
1,100
Proceeds From Stock Option Exercised
27,000
54,000
Net Common Stock Issuance
-565,400
-130,900
Common Stock Payments
-565,400
-130,900
Net Issuance Payments Of Debt
-1,400
-1,300
Net Long Term Debt Issuance
-1,400
-1,300
Long Term Debt Payments
-1,400
-1,300
Investing Cash Flow
-431,900
-288,100
Cash Flow From Continuing Investing Activities
-431,900
-288,100
Net Other Investing Changes
-15,900
-30,900
Net Investment Purchase And Sale
-298,500
-122,800
Sale Of Investment
2,209,100
1,107,800
Purchase Of Investment
-2,507,600
-1,230,600
Net Business Purchase And Sale
258,000
Purchase Of Business
258,000
Net PPE Purchase And Sale
-133,400
-149,400
Purchase Of PPE
-133,400
-149,400
Operating Cash Flow
1,428,100
498,000
Cash Flow From Continuing Operating Activities
1,428,100
498,000
Change In Working Capital
244,700
-947,800
Change In Other Current Liabilities
23,100
105,800
Change In Payables And Accrued Expense
106,100
-626,200
Change In Accrued Expense
70,500
-664,500
Change In Payable
35,600
38,300
Change In Account Payable
35,600
38,300
Change In Prepaid Assets
173,400
-250,600
Change In Inventory
-97,700
-77,400
Change In Receivables
39,800
-99,400
Changes In Account Receivables
39,800
-99,400
Other Non Cash Items
-5,000
23,100
Stock Based Compensation
166,400
157,600
Asset Impairment Charge
0
0
Deferred Tax
-65,300
30,500
Deferred Income Tax
-65,300
30,500
Depreciation Amortization Depletion
55,900
55,700
Depreciation And Amortization
55,900
55,700
Operating Gains Losses
7,200
Gain Loss On Investment Securities
7,200
Net Income From Continuing Operations
1,031,400
1,191,100
📊Quarterly mode — Graham Fair Value & 7 Criteria require annual data. Switch to Annual for full analysis.
Quarter vs Same Quarter Last Year
YoY strips seasonality
Revenue Growth (YoY)
Prior year: $2.8B▲ $3.0B+7.8%
Revenue growth vs same quarter last year strips seasonality. Consistent double-digit growth is a Buffett hallmark.
Gross Margin
Prior year: 86.9%▲ 86.8%-0.0pp
Buffett: consistent gross margin above 40% signals durable pricing power and competitive moat.
Operating Margin
Prior year: 41.1%▲ 38.1%-3.0pp
Graham: operating margin reflects true business economics before financing. Trend matters as much as level.
Net Margin
Prior year: 23.3%▲ 34.5%+11.2pp
Net margin can be distorted by one-time items, tax timing, or interest costs — compare to operating margin for signal quality.
Quarterly Health Checks
3 Graham/Buffett criteria that are valid and reliable on quarterly data
✅ Adequate Size
Graham required scale for resilience. Quarterly revenue × 4 gives an annualised proxy.
$3.0B/qtr (≈$11.9B ann.)
vs > $1.5B annualised revenue
✅ Financial Condition
Current assets vs current liabilities — a real-time liquidity snapshot. Valid and reliable on quarterly data.
3.02x current ratio
vs ≥ 2.0x
✅ Free Cash Flow
Buffett's most important single metric. A positive FCF quarter means the business generated real cash for owners after maintaining its asset base.
$1.3B
vs Positive
Operating Cash Flow
$1.4B
Latest quarter · Buffett's cash reality check
ROIC
4.0%
Based on latest annual operating income
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.
Market Cap / Net Assets
5.9x
Net Assets: $19.4B
Asset Context — Biotechnology
R&D costs are expensed immediately under GAAP rather than capitalised as assets, meaning a pharma/biotech company's most valuable assets (drug pipeline, patents) are largely invisible on the balance sheet. Net Assets significantly understates true economic value. Pipeline depth and revenue diversification matter more.
⚠️Revenue grew vs prior year but operating margin contracted. Possible explanations: deliberate investment in growth (hiring, marketing, R&D), input cost inflation, or pricing pressure from competition. Buffett distinguishes between spending that builds moat vs. spending that doesn't.
"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
0.20%
Low — management has little skin in the game
Return on Equity (ROE)
5.3%
Weak — poor returns on equity
Return on Assets (ROA)
3.9%
Fair — average asset utilization
Share Buybacks (Latest Year)
$2.4B
Management is returning capital to shareholders via buybacks
Debt Trend YoY
-2.2% YoY
Debt is declining — management is deleveraging
Leadership Team
Jeffrey Marc Leiden , Ph.
Executive Chairman
Age 69
Reshma Kewalramani FASN,
CEO, President & Director
Age 52
Pay: $6,141,991
0.596% of net income
Charles Wagner Jr.
Executive VP, COO & CFO
Age 57
Pay: $2,990,992
0.290% 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
JPMORGAN CHASE & CO
2.77%
7,033,156
Geode Capital Management, LLC
2.42%
6,139,621
Vanguard Portfolio Management LLC
2.03%
5,145,609
Risk Analysis
Beta (Market Risk)
0.31
Low volatility — more stable than the market
Short Interest
2.0% 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: $451.63High: $507.92
Currently at 61% 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: $83.07. Margin of safety: 0%. Gross profit margin: 86.8%. Operating margin: 38.1%. Net margin: 34.5%. Market cap: $114.6B. Sector: Healthcare. Industry: Biotechnology. Analysis powered by 360investing — free fundamental stock analysis based on Benjamin Graham and Warren Buffett
principles.
Disclaimer: 360investing is provided for informational and educational purposes only and does not constitute financial, investment, legal, or tax advice. All data is sourced from public third-party providers
and may be delayed, inaccurate, or incomplete. Past performance is not indicative of future results. Analysis, scores, and valuations are algorithmic and do not represent professional investment recommendations. Always conduct your own due
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