Are Investors Undervaluing Exelixis (EXEL) Right Now?

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

One company to watch right now is Exelixis (EXEL). EXEL is currently sporting a Zacks Rank of #2 (Buy) and an A for Value.

Another valuation metric that we should highlight is EXEL's P/B ratio of 2.24. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 2.72. Within the past 52 weeks, EXEL's P/B has been as high as 3.28 and as low as 2.01, with a median of 2.71.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. EXEL has a P/S ratio of 3.38. This compares to its industry's average P/S of 9.12.

Vanda Pharmaceuticals (VNDA) may be another strong Medical - Biomedical and Genetics stock to add to your shortlist. VNDA is a # 2 (Buy) stock with a Value grade of A.

Shares of Vanda Pharmaceuticals currently holds a Forward P/E ratio of 37.67, and its PEG ratio is 0.85. In comparison, its industry sports average P/E and PEG ratios of 79.68 and 4.61.

VNDA's Forward P/E has been as high as 71.28 and as low as 10.39, with a median of 25.86. During the same time period, its PEG ratio has been as high as 0.88, as low as 0.81, with a median of 0.85.

Additionally, Vanda Pharmaceuticals has a P/B ratio of 1.16 while its industry's price-to-book ratio sits at 2.72. For VNDA, this valuation metric has been as high as 2.39, as low as 1.05, with a median of 1.24 over the past year.

These are only a few of the key metrics included in Exelixis and Vanda Pharmaceuticals strong Value grade, but they help show that the stocks are likely undervalued right now. When factoring in the strength of its earnings outlook, EXEL and VNDA look like an impressive value stock at the moment.

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
 
Exelixis, Inc. (EXEL) : Free Stock Analysis Report
 
Vanda Pharmaceuticals Inc. (VNDA) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research