Back to top

Image: Bigstock

LGND or ALKS: Which Is the Better Value Stock Right Now?

Read MoreHide Full Article

Investors interested in stocks from the Medical - Biomedical and Genetics sector have probably already heard of Ligand Pharmaceuticals (LGND - Free Report) and Alkermes (ALKS - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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.

Currently, Ligand Pharmaceuticals has a Zacks Rank of #2 (Buy), while Alkermes has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that LGND has an improving earnings 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.

LGND currently has a forward P/E ratio of 22.73, while ALKS has a forward P/E of 198.36. We also note that LGND has a PEG ratio of 1.52. 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 74.29.

Another notable valuation metric for LGND is its P/B ratio of 2.18. 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, ALKS has a P/B of 2.48.

These metrics, and several others, help LGND earn a Value grade of B, while ALKS has been given a Value grade of C.

LGND 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 LGND is likely the superior value option right now.


In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


Ligand Pharmaceuticals Incorporated (LGND) - free report >>

Alkermes plc (ALKS) - free report >>

Published in