Investors interested in stocks from the Medical - Drugs sector have probably already heard of Amneal Pharmaceuticals (AMRX) and Collegium Pharmaceutical (COLL). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, Amneal Pharmaceuticals is sporting a Zacks Rank of #1 (Strong Buy), while Collegium Pharmaceutical has a Zacks Rank of #5 (Strong Sell). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that AMRX has an improving earnings outlook. But this is just one factor that value investors are interested in.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
AMRX currently has a forward P/E ratio of 8.27, while COLL has a forward P/E of 12.70. We also note that AMRX has a PEG ratio of 0.33. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. COLL currently has a PEG ratio of 0.64.
Another notable valuation metric for AMRX is its P/B ratio of 3.49. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, COLL has a P/B of 4.93.
These are just a few of the metrics contributing to AMRX's Value grade of A and COLL's Value grade of C.
AMRX has seen stronger estimate revision activity and sports more attractive valuation metrics than COLL, so it seems like value investors will conclude that AMRX is the superior option right now.
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AMNEAL PHARMACEUTICALS, INC. (AMRX) : Free Stock Analysis Report
Collegium Pharmaceutical, Inc. (COLL) : Free Stock Analysis Report
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