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EBS or ILMN: Which Is the Better Value Stock Right Now?

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Investors with an interest in Medical - Biomedical and Genetics stocks have likely encountered both Emergent Biosolutions (EBS - Free Report) and Illumina (ILMN - Free Report) . 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Emergent Biosolutions and Illumina are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that EBS is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture for value investors.

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.

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.

EBS currently has a forward P/E ratio of 17.99, while ILMN has a forward P/E of 46.29. We also note that EBS has a PEG ratio of 0.90. 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. ILMN currently has a PEG ratio of 2.20.

Another notable valuation metric for EBS is its P/B ratio of 2.76. 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, ILMN has a P/B of 9.79.

These metrics, and several others, help EBS earn a Value grade of A, while ILMN has been given a Value grade of D.

EBS stands above ILMN thanks to its solid earnings outlook, and based on these valuation figures, we also feel that EBS is the superior value option right now.


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