Should Value Investors Buy Eagle Pharmaceuticals (EGRX) Stock?
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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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 Eagle Pharmaceuticals (EGRX). EGRX is currently sporting a Zacks Rank of #2 (Buy) and an A for Value.
Investors should also recognize that EGRX has a P/B ratio of 1.60. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 4.56. Within the past 52 weeks, EGRX's P/B has been as high as 3.87 and as low as 1.40, with a median of 2.50.
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. EGRX has a P/S ratio of 1.23. This compares to its industry's average P/S of 1.56.
These are just a handful of the figures considered in Eagle 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 EGRX is an impressive value stock right now.
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