U.S. Markets closed

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

Zacks Equity Research
Hyatt Hotels (H) has an impressive earnings surprise history and currently possesses the right combination of the two key ingredients for a likely beat in its next quarterly report.

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 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Currently, Smiths Group PLC has 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 factor that value investors are interested in.

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 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 15.18, while SWCH has a forward P/E of 62.54. We also note that SMGZY has a PEG ratio of 2.59. 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. SWCH currently has a PEG ratio of 4.17.

Another notable valuation metric for SMGZY is its P/B ratio of 2.43. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, SWCH has a P/B of 3.06.

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

SMGZY sticks out from SWCH in both our Zacks Rank and Style Scores models, so value investors will likely feel that SMGZY is the better option right now.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Smiths Group PLC (SMGZY) : Free Stock Analysis Report
 
Switch, Inc. (SWCH) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.