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, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
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 stock to keep an eye on is Collegium Pharmaceutical (COLL). COLL is currently sporting a Zacks Rank #2 (Buy), as well as a Value grade of A.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. COLL has a P/S ratio of 1.55. This compares to its industry's average P/S of 3.75.
Finally, investors should note that COLL has a P/CF ratio of 4.58. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 12.89. COLL's P/CF has been as high as 7.17 and as low as 3.49, with a median of 5.13, all within the past year.
These are just a handful of the figures considered in Collegium Pharmaceutical's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that COLL is an impressive value stock right now.
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Collegium Pharmaceutical, Inc. (COLL): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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