Investors with an interest in Medical - Biomedical and Genetics stocks have likely encountered both Exelixis (EXEL) and Illumina (ILMN). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Right now, Exelixis is sporting a Zacks Rank of #2 (Buy), while Illumina has a Zacks Rank of #5 (Strong Sell). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that EXEL is likely seeing its earnings outlook improve to a greater extent. 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 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.
EXEL currently has a forward P/E ratio of 23.29, while ILMN has a forward P/E of 47.81. We also note that EXEL has a PEG ratio of 0.51. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. ILMN currently has a PEG ratio of 2.64.
Another notable valuation metric for EXEL is its P/B ratio of 4.73. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, ILMN has a P/B of 10.94.
These metrics, and several others, help EXEL earn a Value grade of B, while ILMN has been given a Value grade of F.
EXEL has seen stronger estimate revision activity and sports more attractive valuation metrics than ILMN, so it seems like value investors will conclude that EXEL is the superior option right now.
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Exelixis, Inc. (EXEL) : Free Stock Analysis Report
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