Investors with an interest in Medical - Biomedical and Genetics stocks have likely encountered both Exelixis (EXEL) and argenex SE (ARGX). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. 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.
Exelixis and argenex SE are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that EXEL likely has seen a stronger improvement to its earnings outlook than ARGX has recently. However, value investors will care about much more than just this.
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.
EXEL currently has a forward P/E ratio of 16.81, while ARGX has a forward P/E of 42.68. We also note that EXEL has a PEG ratio of 0.79. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. ARGX currently has a PEG ratio of 0.99.
Another notable valuation metric for EXEL is its P/B ratio of 5.73. 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, ARGX has a P/B of 6.02.
These metrics, and several others, help EXEL earn a Value grade of B, while ARGX has been given a Value grade of C.
EXEL sticks out from ARGX in both our Zacks Rank and Style Scores models, so value investors will likely feel that EXEL is the better option right now.
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Exelixis, Inc. (EXEL): Free Stock Analysis Report argenex SE (ARGX): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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