Investors interested in Medical - Biomedical and Genetics stocks are likely familiar with Exelixis (EXEL) and Illumina (ILMN). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Both Exelixis and Illumina have a Zacks Rank of #2 (Buy) right now. Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. But this is just one factor that value investors are interested in.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
EXEL currently has a forward P/E ratio of 16.18, while ILMN has a forward P/E of 36.92. We also note that EXEL has a PEG ratio of 1.47. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. ILMN currently has a PEG ratio of 3.60.
Another notable valuation metric for EXEL is its P/B ratio of 7.41. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, ILMN has a P/B of 10.84.
These metrics, and several others, help EXEL earn a Value grade of B, while ILMN has been given a Value grade of C.
Both EXEL and ILMN are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that EXEL is the superior value option right now.
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Exelixis, Inc. (EXEL): Free Stock Analysis Report
Illumina, Inc. (ILMN): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).