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ALXN vs. ILMN: Which Stock Is the Better Value Option?

Zacks Equity Research

Investors looking for stocks in the Medical - Biomedical and Genetics sector might want to consider either Alexion Pharmaceuticals (ALXN) or Illumina (ILMN). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Alexion Pharmaceuticals has a Zacks Rank of #2 (Buy), while Illumina has a Zacks Rank of #3 (Hold) right now. This means that ALXN's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.

Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

ALXN currently has a forward P/E ratio of 11.02, while ILMN has a forward P/E of 50.07. We also note that ALXN has a PEG ratio of 0.79. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. ILMN currently has a PEG ratio of 2.38.

Another notable valuation metric for ALXN is its P/B ratio of 2.43. 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 10.69.

These metrics, and several others, help ALXN earn a Value grade of B, while ILMN has been given a Value grade of D.

ALXN is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that ALXN is likely the superior value option right now.


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Alexion Pharmaceuticals, Inc. (ALXN) : Free Stock Analysis Report
 
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