Back to top

Image: Bigstock

TIXT or SMRT: Which Is the Better Value Stock Right Now?

Read MoreHide Full Article

Investors interested in Technology Services stocks are likely familiar with Telus International (TIXT - Free Report) and SmartRent, Inc. (SMRT - Free Report) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

Currently, Telus International has a Zacks Rank of #2 (Buy), while SmartRent, Inc. has a Zacks Rank of #4 (Sell). This means that TIXT's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.

The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

TIXT currently has a forward P/E ratio of 8.01, while SMRT has a forward P/E of 14,867.26. We also note that TIXT has a PEG ratio of 7.49. 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. SMRT currently has a PEG ratio of 743.36.

Another notable valuation metric for TIXT is its P/B ratio of 0.33. 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, SMRT has a P/B of 1.96.

Based on these metrics and many more, TIXT holds a Value grade of A, while SMRT has a Value grade of D.

TIXT has seen stronger estimate revision activity and sports more attractive valuation metrics than SMRT, so it seems like value investors will conclude that TIXT is the superior option right now.

See More Zacks Research for These Tickers

Normally $25 each - click below to receive one report FREE:

SmartRent, Inc. (SMRT) - free report >>

TELUS International (CDA) Inc. (TIXT) - free report >>

Published in