Investors with an interest in Medical - Drugs stocks have likely encountered both Assertio (ASRT - Free Report) and Collegium Pharmaceutical (COLL - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
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, Assertio is sporting a Zacks Rank of #2 (Buy), while Collegium Pharmaceutical has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that ASRT likely has seen a stronger improvement to its earnings outlook than COLL has recently. But this is just one piece of the puzzle for value investors.
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.
ASRT currently has a forward P/E ratio of 5.93, while COLL has a forward P/E of 27.98. We also note that ASRT has a PEG ratio of 0.30. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. COLL currently has a PEG ratio of 1.40.
Another notable valuation metric for ASRT is its P/B ratio of 1.14. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, COLL has a P/B of 7.49.
Based on these metrics and many more, ASRT holds a Value grade of A, while COLL has a Value grade of D.
ASRT stands above COLL thanks to its solid earnings outlook, and based on these valuation figures, we also feel that ASRT is the superior value option right now.