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BMY vs. ILMN: Which Stock Should Value Investors Buy Now?

Zacks Equity Research

Investors interested in Medical - Biomedical and Genetics stocks are likely familiar with Bristol Myers Squibb (BMY) 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.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Bristol Myers Squibb has a Zacks Rank of #2 (Buy), while Illumina has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that BMY likely has seen a stronger improvement to its earnings outlook than ILMN has recently. But this is just one piece of the puzzle for value investors.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.

Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

BMY currently has a forward P/E ratio of 9.61, while ILMN has a forward P/E of 61.16. We also note that BMY has a PEG ratio of 1.15. 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 5.56.

Another notable valuation metric for BMY is its P/B ratio of 2.69. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, ILMN has a P/B of 11.92.

Based on these metrics and many more, BMY holds a Value grade of A, while ILMN has a Value grade of C.

BMY 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 BMY is likely the superior value option right now.


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Bristol Myers Squibb Company (BMY) : Free Stock Analysis Report
 
Illumina, Inc. (ILMN) : Free Stock Analysis Report
 
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Zacks Investment Research