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GILD or ILMN: Which Is the Better Value Stock Right Now?

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Investors with an interest in Medical - Biomedical and Genetics stocks have likely encountered both Gilead Sciences (GILD - Free Report) and Illumina (ILMN - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? 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.

Both Gilead Sciences and Illumina have a Zacks Rank of # 2 (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. However, value investors will care about much more than just this.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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.

GILD currently has a forward P/E ratio of 9.28, while ILMN has a forward P/E of 46.86. We also note that GILD has a PEG ratio of 0.75. 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 2.18.

Another notable valuation metric for GILD is its P/B ratio of 3.69. 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, ILMN has a P/B of 11.31.

These metrics, and several others, help GILD earn a Value grade of A, while ILMN has been given a Value grade of D.

Both GILD and ILMN are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that GILD is the superior value option right now.


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