One of the key ratio's to determine if a stock is over valued or under valued is by using what is called the Peg Ratio. This metric takes the companies p/e and divides it by future growth to determine fair value. It is thought that a Peg of 1.0 is considering failrly valued and anything noth of that could indicate the sock is over valued. Peter Lynch wrote that this method of measurement is a key component in any of his buying or selling decisions.
Qcor has a peg ratio of .22 which is the lowest number you will find anywhere in the Nasdaq. The ratio implies that based on future growth we are almost 5 times undervalued what is considered fair value going out 12 months. Even if we were to factor in some risk factors for having a pending investigation along with questions about on insurance company tightening up their approval process for Acthar, our Peg ratio is well below anything that would imply fair value.
We are at screaming buy levels and it is only a matter of time before the pps will acurately reflect our true value.
While I am long QCOR there are a few other reasons why the PE ratio may be less than one would expect for its growth rate. You only need to look at AFFY or SPPI to see what can happen to biotechs with only one product (AFFY), or most of the sales coming from one product as in SPPI's case. There are risks where and when they are least expected.
Couldn't agree with you more...Truly defies logic and everything I learned in my thirty plus years in this business. Yet it is still up over 85% off the Sep. low and nothing but good to great news and analysis keeps coming. I expect upgrades from financial road trip currently underway, but even with the bounce that we'll get from those upgrades it will still be profoundly undervalued. USING THE MOST MINIMALIST numbers (a simple 4X last quarter's earnings=$4.36 EPS 2013, which is far below my bottom up est. of $6.79 EPS 2013) and a ridiculously low 20 P/E for their growth of 109% last year (PEG should equal 109) the stock price MINIMUM TODAY should be $87.20...Which is to say that it is still very much in the hands of day and swing traders, bears and MOST SIGNIFICANTLY A HUGE SHORT POPULATION (on almost zero float)!!! Hence my relentless comment that a Short Squeeze Tsunami is inevitable...And that thesis has only improved in time...So the only thing to do with this information is to BE VERY PATIENT AND SEE IT THROUGH to share price that begins to reflect the Questcor reality!!!