Amgen, Inc. (AMGN), Gilead Sciences, Inc. (GILD): Great Pipelines, Unimpressive Fundamentals

To put any of this into perspective, the comparable statistic for Bank of America is an impressively low .71. So, the numbers that value investors are seeking – a price to book ratio of less than one – are not necessarily unobtainable. Granted, it might be stretching a point to compare the figures posted by a long-established financial institution, such as the Bank of America, with those posted by evolving pharmaceutical companies – Amgen, Inc. (NASDAQ:AMGN), Mylan Inc. (NASDAQ:MYL) and Gilead Sciences, Inc. (NASDAQ:GILD). Their circumstances are obviously not the same. But differences in fundamentals that glaring cannot safely be ignored.

A Foolish conclusion

The list of pharmaceuticals that Amgen,  Mylan and Gilead Sciences, Inc. (NASDAQ:GILD) have in their pipelines or are currently marketing is impressive. Amgen, for example, is developing medications designed to treat everything from psoriasis to gastric cancer. Any one of the medications these firms are evolving could eventually turn out to be a blockbuster, bringing in billions annually.

Yet, their numbers do not add up to making them a great buy. They have more debt than their equity can safely handle. And their long term debt, as measured over the last two years seems to be increasing, a sign their financial situation might not be improving with time. Another strong concern: their price to price/book ratios stand above “safe levels,” a possible indication that these stocks are overpriced and could be facing a tumble.

It might be reassuring to figure that Amgen, Gilead Sciences, Inc. (NASDAQ:GILD) and Mylan Inc. (NASDAQ:MYL) could offer investors the best of both worlds: sustained profitability plus a chance to invest in products that could save lives. But their numbers indicate that they might not represent that rare mix.

The article Great Pipelines, Unimpressive Fundamentals originally appeared on Fool.com and is written by Harriet Tramer.

Harriet Tramer Tramer has no position in any stocks mentioned. The Motley Fool recommends Gilead Sciences (NASDAQ:GILD). Harriet is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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