Is Illumina Cheap or Expensive?
Investors use a lot of different multiples to figure out if a stock is cheap or expensive. Sometimes that can just create confusion. Take Illumina (NASDAQ: ILMN), for example. The stock is down 60% from its peak to just above $200 per share -- a level it first reached in early 2018. That seems like a discount at first glance.
But there is a lot going on for the global market share leader in gene sequencing instruments. The pandemic boosted demand for its business while management was making significant investments in developing a new product. Add in that the company is attempting to make an acquisition despite threats from regulators on both sides of the Atlantic and it's hard to make sense of it all. Let's take a look at the company's valuation from a few different angles.
The price-to-earnings (PE) ratio is probably the most often-cited valuation metric. But relying on it alone can be treacherous. That's because calculating earnings can be tricky. They are subject to all manner of accounting adjustments. Illumina recently reported a loss of $24.26 per share after writing off almost $4 billion of the $8 billion it spent to acquire genomic testing company Grail. It makes earnings appear deeply in the red.
Source Fool.com
