Is Jazz Pharmaceuticals Stock Undervalued Right Now?

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. 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.

One company to watch right now is Jazz Pharmaceuticals JAZZ. JAZZ is currently sporting a Zacks Rank of #2 (Buy) and an A for Value.

Investors should also note that JAZZ holds a PEG ratio of 1.05. 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 PEG compares to its industry's average PEG of 2.21. JAZZ's PEG has been as high as 1.44 and as low as 0.64, with a median of 1.05, all within the past year.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. JAZZ has a P/S ratio of 1.76. This compares to its industry's average P/S of 3.11.

Finally, investors will want to recognize that JAZZ has a P/CF ratio of 5.74. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. JAZZ's P/CF compares to its industry's average P/CF of 11.35. Over the past year, JAZZ's P/CF has been as high as 43.45 and as low as 5.21, with a median of 7.66.

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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