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EXELIXIS INC (NASDAQ:EXEL): A Strong Value Investment with Undervalued Potential and Solid Fundamentals

By Mill Chart

Last update: Jul 30, 2025

Value investing focuses on finding stocks priced below their true worth while having solid financial foundations. The method, based on Benjamin Graham’s ideas, looks for firms with steady earnings, strong financial positions, and room for expansion, all at a lower price. A "Decent Value" screen picks stocks with a valuation score above 7 (showing they are undervalued) while also having good marks in earnings, financial stability, and growth. This method lowers the chance of falling into value traps by prioritizing quality along with low prices.

EXELIXIS INC (NASDAQ:EXEL) appears as a strong option under this system, earning an 8 in valuation, 9 in financial health, 8 in profitability, and 8 in growth in ChartMill’s fundamental analysis report. Here’s what makes it notable:

Valuation: Priced Low with Potential to Rise

The stock’s valuation numbers indicate it is cheaper compared to similar companies and the wider market:

  • Price/Earnings (P/E) of 16.94 is lower than 95% of its biotechnology industry peers and below the S&P 500 average (27.91).
  • Forward P/E of 12.80 further highlights its discount, trading at a lower price than 95% of the sector.
  • Enterprise Value/EBITDA and Price/Free Cash Flow ratios put it in the top 4% of the industry for affordability.
  • A low PEG ratio (factoring in earnings growth) suggests the price isn’t just low—it might be incorrect given future growth prospects.

For value investors, these figures match the strategy’s main idea: buying stocks at a discount with a safety net.

Financial Health: A Strong Balance Sheet

EXEL’s health score of 9 shows outstanding stability and cash reserves:

  • No debt, putting it among the best in its industry for financial soundness.
  • Altman-Z score of 10.66 (well above the safe level of 3) means very low risk of financial trouble, better than 87% of peers.
  • Solid liquidity measures, including a Current Ratio of 3.50 and Quick Ratio of 3.44, show it can easily cover short-term needs.

A sturdy financial position is important for value investors, as it limits risk while the market adjusts to the stock’s true value.

Profitability: Strong Earnings and High Margins

With a profitability score of 8, EXEL shows reliable earnings strength:

  • Return on Equity (30.20%) and Return on Invested Capital (26.25%) are in the top 3% of the biotechnology sector.
  • Gross Margin of 96.78% and Operating Margin of 35.43% show pricing control and cost management, better than 96–98% of peers.
  • Steady profits over the last five years, with positive cash flow and earnings, highlight operational durability.

High profitability confirms the company’s true worth, a key factor for value investors avoiding stocks that are cheap for poor reasons.

Growth: Building Speed

EXEL’s growth score of 8 points to both past and expected progress:

  • Revenue growth of 18.49% (last year) and 17.51% (3-year average) beat many peers.
  • EPS growth of 75.81% (last year) and 25.80% (estimated yearly forward growth) indicate rising earnings.
  • Analysts predict 11.19% yearly revenue growth, slightly slower than past trends but still solid for the sector.

Growth is sometimes ignored in classic value screens, but EXEL’s mix of low price and growth potential fits newer views of value investing—where factors like earnings growth can help close the price gap.

Conclusion: A Well-Rounded Pick

EXELIXIS offers a unique combination of low price, financial stability, earnings strength, and growth—key parts of a good value investment. Its focus on oncology, including its main drug cabozantinib, adds growth potential that could further shrink the difference between its market price and true value.

For investors looking for similar options, check out more stocks that pass the Decent Value Stocks Screen.

Disclaimer: This analysis is not investment advice. Do your own research or talk to a financial advisor before making investment choices.