Investors looking for stocks in the Medical - Biomedical and Genetics sector might want to consider either Exelixis (EXEL) or Exact Sciences (EXAS). 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.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. 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.
Right now, Exelixis is sporting a Zacks Rank of #2 (Buy), while Exact Sciences has a Zacks Rank of #3 (Hold). This means that EXEL's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture 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.
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.
EXEL currently has a forward P/E ratio of 13.46, while EXAS has a forward P/E of 73.35. We also note that EXEL has a PEG ratio of 0.69. 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. EXAS currently has a PEG ratio of 2.42.
Another notable valuation metric for EXEL is its P/B ratio of 5.41. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, EXAS has a P/B of 7.76.
These are just a few of the metrics contributing to EXEL's Value grade of B and EXAS's Value grade of D.
EXEL has seen stronger estimate revision activity and sports more attractive valuation metrics than EXAS, so it seems like value investors will conclude that EXEL is the superior option right now.
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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
