EXEL vs. ILMN: Which Stock Is the Better Value Option?
Investors interested in Medical - Biomedical and Genetics stocks are likely familiar with Exelixis (EXEL) and Illumina (ILMN). But which of these two companies is the best option for those looking for undervalued stocks? 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, Exelixis has a Zacks Rank of #2 (Buy), while Illumina has a Zacks Rank of #5 (Strong Sell). This means that EXEL'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 are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
EXEL currently has a forward P/E ratio of 31.03, while ILMN has a forward P/E of 68.17. We also note that EXEL has a PEG ratio of 0.70. 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 11.21.
Another notable valuation metric for EXEL is its P/B ratio of 3.37. 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 11.82.
These metrics, and several others, help EXEL earn a Value grade of B, while ILMN has been given a Value grade of F.
EXEL 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 EXEL is likely the superior value option right now.
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Exelixis, Inc. (EXEL) : Free Stock Analysis Report
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