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LGND vs. ILMN: Which Stock Should Value Investors Buy Now?

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Zacks Equity Research
·2 min read
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Investors interested in Medical - Biomedical and Genetics stocks are likely familiar with Ligand Pharmaceuticals (LGND) and Illumina (ILMN). But which of these two stocks presents investors with the better value opportunity right now? Let's 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Right now, Ligand Pharmaceuticals is sporting a Zacks Rank of #2 (Buy), while Illumina has a Zacks Rank of #3 (Hold). This means that LGND's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. 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.

LGND currently has a forward P/E ratio of 27.82, while ILMN has a forward P/E of 64.98. We also note that LGND has a PEG ratio of 1.85. 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. ILMN currently has a PEG ratio of 5.91.

Another notable valuation metric for LGND is its P/B ratio of 2.67. 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, ILMN has a P/B of 12.66.

These are just a few of the metrics contributing to LGND's Value grade of A and ILMN's Value grade of C.

LGND has seen stronger estimate revision activity and sports more attractive valuation metrics than ILMN, so it seems like value investors will conclude that LGND is the superior option right now.


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Ligand Pharmaceuticals Incorporated (LGND) : Free Stock Analysis Report
 
Illumina, Inc. (ILMN) : Free Stock Analysis Report
 
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