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

Zacks

Investors looking for stocks in the Medical – Biomedical and Genetics sector might want to consider either Ligand Pharmaceuticals (LGND) or Illumina (ILMN). But which of these two stocks is more attractive to value investors? We’ll need to take a closer look to find out.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. 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.

Currently, both Ligand Pharmaceuticals and Illumina are holding a Zacks Rank of # 2 (Buy). Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. But this is just one factor that value investors are interested in.

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 highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

LGND currently has a forward P/E ratio of 6.05, while ILMN has a forward P/E of 47.35. We also note that LGND has a PEG ratio of 0.30. 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. ILMN currently has a PEG ratio of 2.20.

Another notable valuation metric for LGND is its P/B ratio of 4.48. The P/B ratio pits a stock’s market value against its book value, which is defined as total assets minus total liabilities. For comparison, ILMN has a P/B of 11.82.

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

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


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