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Should Value Investors Buy Collegium Pharmaceutical (COLL) Stock?

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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, 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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

Collegium Pharmaceutical (COLL - Free Report) is a stock many investors are watching right now. COLL is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. 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 1.94. This compares to its industry's average P/S of 3.63.

Finally, our model also underscores that COLL has a P/CF ratio of 5.75. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 11.03. Over the past year, COLL's P/CF has been as high as 8.61 and as low as 5.26, with a median of 6.41.

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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