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GILD vs. ALKS: Which Stock Is the Better Value Option?

Zacks Equity Research
AbbVie (ABBV) closed at $78.45 in the latest trading session, marking a -0.42% move from the prior day.

Investors interested in stocks from the Medical - Biomedical and Genetics sector have probably already heard of Gilead Sciences (GILD) and Alkermes (ALKS). 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Both Gilead Sciences and Alkermes have a Zacks Rank of # 2 (Buy) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. But this is just one piece of the puzzle for value investors.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.

The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

GILD currently has a forward P/E ratio of 9.45, while ALKS has a forward P/E of 95.86. We also note that GILD has a PEG ratio of 0.93. 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. ALKS currently has a PEG ratio of 3.42.

Another notable valuation metric for GILD is its P/B ratio of 3.77. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, ALKS has a P/B of 4.61.

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

Both GILD and ALKS are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that GILD is the superior value option right now.


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