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

Zacks Equity Research

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 is more attractive to value investors? We'll need to take a closer look to find out.

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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies 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). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that SMGZY is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture 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.

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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 20.28, while SWCH has a forward P/E of 151.52. We also note that SMGZY has a PEG ratio of 3.10. 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 13.12.

Another notable valuation metric for SMGZY is its P/B ratio of 2.78. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, SWCH has a P/B of 5.73.

These metrics, and several others, help SMGZY earn a Value grade of B, while SWCH has been given a 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
 
Switch, Inc. (SWCH) : Free Stock Analysis Report
 
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