Investors interested in stocks from the Medical - Biomedical and Genetics sector have probably already heard of Anika Therapeutics (ANIK) and Illumina (ILMN). 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, Anika Therapeutics is sporting a Zacks Rank of #2 (Buy), while Illumina has a Zacks Rank of #5 (Strong Sell). This means that ANIK's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. 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.
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.
ANIK currently has a forward P/E ratio of 37, while ILMN has a forward P/E of 62.22. We also note that ANIK has a PEG ratio of 3.70. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. ILMN currently has a PEG ratio of 8.89.
Another notable valuation metric for ANIK is its P/B ratio of 1.60. 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 8.79.
These metrics, and several others, help ANIK earn a Value grade of B, while ILMN has been given a Value grade of D.
ANIK stands above ILMN thanks to its solid earnings outlook, and based on these valuation figures, we also feel that ANIK is the superior value option right now.
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