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GILD or EXEL: Which Is the Better Value Stock Right Now?

Zacks Equity Research

Investors interested in stocks from the Medical - Biomedical and Genetics sector have probably already heard of Gilead Sciences (GILD) and Exelixis (EXEL). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. 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.

Gilead Sciences and Exelixis are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that GILD has an improving earnings outlook. But this is only part of the picture for value investors.

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.

GILD currently has a forward P/E ratio of 9.02, while EXEL has a forward P/E of 35.12. We also note that GILD has a PEG ratio of 3.69. 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. EXEL currently has a PEG ratio of 4.28.

Another notable valuation metric for GILD is its P/B ratio of 3.86. 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, EXEL has a P/B of 3.87.

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

GILD 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 GILD is likely the superior value option right now.


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Gilead Sciences, Inc. (GILD) : Free Stock Analysis Report
 
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