Investors interested in stocks from the Medical - Biomedical and Genetics sector have probably already heard of Harmony Biosciences Holdings, Inc. (HRMY) and Illumina (ILMN). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Right now, Harmony Biosciences Holdings, Inc. is sporting a Zacks Rank of #2 (Buy), while Illumina has a Zacks Rank of #4 (Sell). Investors should feel comfortable knowing that HRMY likely has seen a stronger improvement to its earnings outlook than ILMN has recently. But this is only part of the picture for value investors.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when 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.
HRMY currently has a forward P/E ratio of 11.28, while ILMN has a forward P/E of 23.26. We also note that HRMY has a PEG ratio of 0.48. 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 1.93.
Another notable valuation metric for HRMY is its P/B ratio of 2.76. 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 6.59.
Based on these metrics and many more, HRMY holds a Value grade of A, while ILMN has a Value grade of C.
HRMY 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 HRMY is likely the superior value option right now.
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Harmony Biosciences Holdings, Inc. (HRMY): Free Stock Analysis Report Illumina, Inc. (ILMN): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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