Yahoo Finance COLL or ZTS: Which Is the Better Value Stock Right Now?
Investors interested in stocks from the Medical - Drugs sector have probably already heard of Collegium Pharmaceutical (COLL) and Zoetis (ZTS). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.
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.
Collegium Pharmaceutical and Zoetis are sporting Zacks Ranks of #1 (Strong Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that COLL likely has seen a stronger improvement to its earnings outlook than ZTS has recently. But this is only part of the picture for value investors.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its 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 4.31, while ZTS has a forward P/E of 29.73. We also note that COLL has a PEG ratio of 0.22. 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. ZTS currently has a PEG ratio of 2.69.
Another notable valuation metric for COLL is its P/B ratio of 4.63. 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, ZTS has a P/B of 15.83.
Based on these metrics and many more, COLL holds a Value grade of A, while ZTS has a Value grade of C.
COLL has seen stronger estimate revision activity and sports more attractive valuation metrics than ZTS, so it seems like value investors will conclude that COLL is the superior option right now.
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Collegium Pharmaceutical, Inc. (COLL) : Free Stock Analysis Report
Zoetis Inc. (ZTS) : Free Stock Analysis Report
