Investors with an interest in Technology Services stocks have likely encountered both Smiths Group PLC (SMGZY) and Switch (SWCH). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Right now, Smiths Group PLC is sporting a Zacks Rank of #2 (Buy), while Switch has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that SMGZY likely has seen a stronger improvement to its earnings outlook than SWCH has recently. But this is just one piece of the puzzle for value investors.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their 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 14.82, while SWCH has a forward P/E of 77.59. We also note that SMGZY has a PEG ratio of 2.22. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. SWCH currently has a PEG ratio of 6.72.
Another notable valuation metric for SMGZY is its P/B ratio of 2.39. 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. By comparison, SWCH has a P/B of 4.59.
These are just a few of the metrics contributing to SMGZY's Value grade of A and SWCH's Value grade of D.
SMGZY has seen stronger estimate revision activity and sports more attractive valuation metrics than SWCH, so it seems like value investors will conclude that SMGZY is the superior option right now.
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Smiths Group PLC (SMGZY) : Free Stock Analysis Report
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