Back to top

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

Read MoreHide Full Article

Investors with an interest in Technology Services stocks have likely encountered both Smiths Group PLC (SMGZY - Free Report) and Switch (SWCH - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? 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 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.

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.

The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

SMGZY currently has a forward P/E ratio of 15.41, while SWCH has a forward P/E of 59.13. We also note that SMGZY has a PEG ratio of 2.63. 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 3.94.

Another notable valuation metric for SMGZY is its P/B ratio of 2.47. 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 2.89.

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

SMGZY stands above SWCH thanks to its solid earnings outlook, and based on these valuation figures, we also feel that SMGZY is the superior value option right now.


In-Depth Zacks Research for the Tickers Above


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


Smiths Group PLC (SMGZY) - free report >>

Switch, Inc. (SWCH) - free report >>

Published in