Investors with an interest in Medical - Biomedical and Genetics stocks have likely encountered both Ligand Pharmaceuticals (LGND) and Alkermes (ALKS). 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Ligand Pharmaceuticals has a Zacks Rank of #2 (Buy), while Alkermes has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that LGND likely has seen a stronger improvement to its earnings outlook than ALKS 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.
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.
LGND currently has a forward P/E ratio of 24.98, while ALKS has a forward P/E of 32.77. We also note that LGND has a PEG ratio of 1.25. 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. ALKS currently has a PEG ratio of 1.56.
Another notable valuation metric for LGND is its P/B ratio of 2.26. 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 2.84.
These metrics, and several others, help LGND earn a Value grade of B, while ALKS has been given a Value grade of C.
LGND sticks out from ALKS in both our Zacks Rank and Style Scores models, so value investors will likely feel that LGND is the better option right now.
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Ligand Pharmaceuticals Incorporated (LGND) : Free Stock Analysis Report
Alkermes plc (ALKS) : Free Stock Analysis Report
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