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SMGZY vs. SWCH: Which Stock Is the Better Value Option?

Zacks Equity Research

Investors looking for stocks in the Technology Services sector might want to consider either Smiths Group PLC (SMGZY) or Switch (SWCH). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Both Smiths Group PLC and Switch have a Zacks Rank of # 2 (Buy) right now. This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. However, value investors will care about much more than just this.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.

Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

SMGZY currently has a forward P/E ratio of 15.55, while SWCH has a forward P/E of 68.31. We also note that SMGZY has a PEG ratio of 2.68. 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. SWCH currently has a PEG ratio of 5.69.

Another notable valuation metric for SMGZY is its P/B ratio of 2.52. 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 3.81.

Based on these metrics and many more, SMGZY holds a Value grade of B, while SWCH has a Value grade of F.

Both SMGZY and SWCH are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that SMGZY is 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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