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

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Investors interested in stocks from the Technology Services sector have probably already heard of Smiths Group PLC (SMGZY - Free Report) and Thomson Reuters (TRI - 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.

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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Smiths Group PLC and Thomson Reuters are sporting Zacks Ranks of #2 (Buy) and #5 (Strong Sell), respectively, right now. Investors should feel comfortable knowing that SMGZY likely has seen a stronger improvement to its earnings outlook than TRI has recently. But this is just one piece of the puzzle for value investors.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their 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.

SMGZY currently has a forward P/E ratio of 15.07, while TRI has a forward P/E of 50.44. We also note that SMGZY has a PEG ratio of 2.57. 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. TRI currently has a PEG ratio of 5.61.

Another notable valuation metric for SMGZY is its P/B ratio of 2.42. 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, TRI has a P/B of 3.06.

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

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


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