Canada Markets closed

ALXN or GMAB: Which Is the Better Value Stock Right Now?

  • Oops!
    Something went wrong.
    Please try again later.
·2 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.

Investors looking for stocks in the Medical - Biomedical and Genetics sector might want to consider either Alexion Pharmaceuticals (ALXN) or Genmab AS Sponsored ADR (GMAB). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Alexion Pharmaceuticals has a Zacks Rank of #2 (Buy), while Genmab AS Sponsored ADR has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that ALXN likely has seen a stronger improvement to its earnings outlook than GMAB has recently. 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.

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.

ALXN currently has a forward P/E ratio of 13.42, while GMAB has a forward P/E of 73. We also note that ALXN has a PEG ratio of 0.89. 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. GMAB currently has a PEG ratio of 2.70.

Another notable valuation metric for ALXN is its P/B ratio of 3.31. 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, GMAB has a P/B of 8.38.

These are just a few of the metrics contributing to ALXN's Value grade of B and GMAB's Value grade of C.

ALXN 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 ALXN is likely the superior value option right now.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Alexion Pharmaceuticals, Inc. (ALXN) : Free Stock Analysis Report
 
Genmab AS Sponsored ADR (GMAB) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting