Investors with an interest in Technology Services stocks have likely encountered both Smiths Group PLC (SMGZY) and Palantir Technologies Inc. (PLTR). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 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.
Smiths Group PLC and Palantir Technologies Inc. are both sporting a Zacks Rank of # 2 (Buy) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. But this is just one piece of the puzzle for value investors.
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 grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
SMGZY currently has a forward P/E ratio of 17.85, while PLTR has a forward P/E of 173.38. We also note that SMGZY has a PEG ratio of 1.64. 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. PLTR currently has a PEG ratio of 4.81.
Another notable valuation metric for SMGZY is its P/B ratio of 3.13. 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, PLTR has a P/B of 41.55.
These are just a few of the metrics contributing to SMGZY's Value grade of B and PLTR's Value grade of F.
Both SMGZY and PLTR are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that SMGZY is the superior value option right now.
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