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Investors interested in stocks from the Medical - Biomedical and Genetics sector have probably already heard of Gilead Sciences (GILD) and Alnylam Pharmaceuticals (ALNY). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, both Gilead Sciences and Alnylam Pharmaceuticals are sporting a Zacks Rank of # 2 (Buy). 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. But this is just one piece of the puzzle for value investors.
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.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
GILD currently has a forward P/E ratio of 12.35, while ALNY has a forward P/E of 659.03. We also note that GILD has a PEG ratio of 1.31. 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. ALNY currently has a PEG ratio of 20.24.
Another notable valuation metric for GILD is its P/B ratio of 6.30. 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, ALNY has a P/B of 1,062.58.
Based on these metrics and many more, GILD holds a Value grade of A, while ALNY has a Value grade of D.
Both GILD and ALNY 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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Gilead Sciences, Inc. (GILD) : Free Stock Analysis Report
Alnylam Pharmaceuticals, Inc. (ALNY) : Free Stock Analysis Report