COLL vs. ZTS: Which Stock Is the Better Value Option?
Investors with an interest in Medical - Drugs stocks have likely encountered both Collegium Pharmaceutical (COLL) and Zoetis (ZTS). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, Collegium Pharmaceutical is sporting a Zacks Rank of #2 (Buy), while Zoetis has a Zacks Rank of #3 (Hold). This means that COLL's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.
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 Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
COLL currently has a forward P/E ratio of 4.71, while ZTS has a forward P/E of 28.76. We also note that COLL has a PEG ratio of 0.24. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. ZTS currently has a PEG ratio of 2.65.
Another notable valuation metric for COLL is its P/B ratio of 4.92. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, ZTS has a P/B of 15.43.
These are just a few of the metrics contributing to COLL's Value grade of A and ZTS's Value grade of C.
COLL stands above ZTS thanks to its solid earnings outlook, and based on these valuation figures, we also feel that COLL is the superior value option right now.
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Collegium Pharmaceutical, Inc. (COLL) : Free Stock Analysis Report
Zoetis Inc. (ZTS) : Free Stock Analysis Report
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