Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
Jazz Pharmaceuticals (JAZZ) is a stock many investors are watching right now. JAZZ is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value.
We also note that JAZZ holds a PEG ratio of 0.80. 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. JAZZ's industry has an average PEG of 2.21 right now. Over the past 52 weeks, JAZZ's PEG has been as high as 1.44 and as low as 0.70, with a median of 1.07.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. JAZZ has a P/S ratio of 1.78. This compares to its industry's average P/S of 2.87.
Finally, our model also underscores that JAZZ has a P/CF ratio of 6.90. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. JAZZ's current P/CF looks attractive when compared to its industry's average P/CF of 9.43. Within the past 12 months, JAZZ's P/CF has been as high as 12.70 and as low as 5.21, with a median of 7.05.
These are just a handful of the figures considered in Jazz Pharmaceuticals's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that JAZZ is an impressive value stock right now.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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