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Are Investors Undervaluing Collegium Pharmaceutical (COLL) Right Now?

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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.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One company to watch right now is Collegium Pharmaceutical (COLL - Free Report) . COLL is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A.

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. COLL has a P/S ratio of 2.05. This compares to its industry's average P/S of 3.21.

Finally, we should also recognize that COLL has a P/CF ratio of 6.29. 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 11.07. Over the past 52 weeks, COLL's P/CF has been as high as 8.61 and as low as 5.26, with a median of 6.40.

These are only a few of the key metrics included in Collegium Pharmaceutical's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, COLL looks like an impressive value stock at the moment.


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