Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Jazz Pharmaceuticals, Inc. (JAZZ - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Jazz Pharmaceuticals has a trailing twelve months PE ratio of 15.36, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 19.89. If we focus on the long-term PE trend, Jazz Pharmaceuticals’ current PE level is fairly below the highs for this stock, suggesting that the stock is undervalued compared to its historical levels.
Further, the stock’s PE also compares highly favorably with the Zacks classified Medical-Drugs industry’s trailing twelve months PE ratio, which stands at 44.09. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Jazz Pharmaceuticals has a forward PE ratio (price relative to this year’s earnings) of just 16.17, so the company’s share price will likely appreciate in the near future.
PEG Ratio
While earnings are certainly important, it is essential to know how much you are paying for the growth of earnings as well. One can easily do that with the PEG ratio (ratio of the P/E to the expected future earnings growth rate).The PEG ratio gives a more complete picture of the valuation of a stock than the P/E ratio.
Jazz Pharmaceuticals’ PEG ratio stands at just 0.91, compared with the Zacks Medical-Drugs industry average of 2.36. This suggests a decent undervalued trading relative to its earnings growth potential right now.
Broad Value Outlook
In aggregate, Jazz Pharmaceuticals currently has a Zacks Value Style Score of ‘B’, putting it into the top 40% of all stocks we cover from this look. This makes Jazz Pharmaceuticals a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, Jazz Pharmaceuticals has a P/S ratio of 4.56. This is considerably lower than the S&P 500 average, which comes in at 8.09 right now. The Price/Sales ratio compares a given stock’s price to its total sales, where a lower reading is generally considered better. Additionally, its P/CF ratio (another great indicator of value) comes in at 13.17, while the industry’s average stands at a negative 3.06. Thus, while the industry is experiencing negative cash flows, JAZZ’s financial health seems much better. Clearly, JAZZ is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Jazz Pharmaceuticals might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘B’ and a Momentum score of ‘A’. This gives JAZZ a Zacks VGM score—or its overarching fundamental grade—of ‘A’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been mixed at best. Both the current quarter and year has seen one downward estimate revision and no upward revision in the past sixty days.
As a result, the consensus estimate for the current quarter has dipped by 1.2% in the past two months, while the full year estimate has inched higher by 1.2%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Jazz Pharmaceuticals PLC Price and Consensus
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Jazz Pharmaceuticals, Inc. (JAZZ - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Jazz Pharmaceuticals has a trailing twelve months PE ratio of 15.36, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 19.89. If we focus on the long-term PE trend, Jazz Pharmaceuticals’ current PE level is fairly below the highs for this stock, suggesting that the stock is undervalued compared to its historical levels.
Further, the stock’s PE also compares highly favorably with the Zacks classified Medical-Drugs industry’s trailing twelve months PE ratio, which stands at 44.09. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Jazz Pharmaceuticals has a forward PE ratio (price relative to this year’s earnings) of just 16.17, so the company’s share price will likely appreciate in the near future.
PEG Ratio
While earnings are certainly important, it is essential to know how much you are paying for the growth of earnings as well. One can easily do that with the PEG ratio (ratio of the P/E to the expected future earnings growth rate).The PEG ratio gives a more complete picture of the valuation of a stock than the P/E ratio.
Jazz Pharmaceuticals’ PEG ratio stands at just 0.91, compared with the Zacks Medical-Drugs industry average of 2.36. This suggests a decent undervalued trading relative to its earnings growth potential right now.
Broad Value Outlook
In aggregate, Jazz Pharmaceuticals currently has a Zacks Value Style Score of ‘B’, putting it into the top 40% of all stocks we cover from this look. This makes Jazz Pharmaceuticals a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, Jazz Pharmaceuticals has a P/S ratio of 4.56. This is considerably lower than the S&P 500 average, which comes in at 8.09 right now. The Price/Sales ratio compares a given stock’s price to its total sales, where a lower reading is generally considered better. Additionally, its P/CF ratio (another great indicator of value) comes in at 13.17, while the industry’s average stands at a negative 3.06. Thus, while the industry is experiencing negative cash flows, JAZZ’s financial health seems much better. Clearly, JAZZ is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Jazz Pharmaceuticals might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘B’ and a Momentum score of ‘A’. This gives JAZZ a Zacks VGM score—or its overarching fundamental grade—of ‘A’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been mixed at best. Both the current quarter and year has seen one downward estimate revision and no upward revision in the past sixty days.
As a result, the consensus estimate for the current quarter has dipped by 1.2% in the past two months, while the full year estimate has inched higher by 1.2%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Jazz Pharmaceuticals PLC Price and Consensus
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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