Investors looking for stocks in the Medical - Biomedical and Genetics sector might want to consider either Cambrex (CBM - Free Report) or Illumina (ILMN - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Both Cambrex and Illumina have a Zacks Rank of # 1 (Strong 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.
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.
CBM currently has a forward P/E ratio of 21.94, while ILMN has a forward P/E of 62.36. We also note that CBM has a PEG ratio of 1.46. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. ILMN currently has a PEG ratio of 2.82.
Another notable valuation metric for CBM is its P/B ratio of 3.37. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, ILMN has a P/B of 14.79.
These metrics, and several others, help CBM earn a Value grade of B, while ILMN has been given a Value grade of D.
Both CBM and ILMN are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that CBM is the superior value option right now.