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SMGZY or SWCH: Which Is the Better Value Stock Right Now?

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Zacks Equity Research
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Investors with an interest in Technology Services stocks have likely encountered both Smiths Group PLC (SMGZY) and Switch (SWCH). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Smiths Group PLC has a Zacks Rank of #2 (Buy), while Switch has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that SMGZY has an improving earnings outlook. But this is just one factor that value investors are interested in.

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.

Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

SMGZY currently has a forward P/E ratio of 16.21, while SWCH has a forward P/E of 80.29. We also note that SMGZY has a PEG ratio of 2.43. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. SWCH currently has a PEG ratio of 6.95.

Another notable valuation metric for SMGZY is its P/B ratio of 2.61. 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, SWCH has a P/B of 4.75.

These metrics, and several others, help SMGZY earn a Value grade of A, while SWCH has been given a Value grade of D.

SMGZY is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that SMGZY is likely the superior value option right now.


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Smiths Group PLC (SMGZY) : Free Stock Analysis Report
 
Switch, Inc. (SWCH) : Free Stock Analysis Report
 
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