Investors looking for stocks in the Technology Services sector might want to consider either Smiths Group PLC (SMGZY) or Cellebrite DI Ltd. (CLBT). But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 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, both Smiths Group PLC and Cellebrite DI Ltd. are sporting a Zacks Rank of # 2 (Buy). This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. But this is only part of the picture 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.
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 17.92, while CLBT has a forward P/E of 43.02. We also note that SMGZY has a PEG ratio of 1.72. 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. CLBT currently has a PEG ratio of 2.84.
Another notable valuation metric for SMGZY is its P/B ratio of 3.16. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, CLBT has a P/B of 11.34.
These metrics, and several others, help SMGZY earn a Value grade of B, while CLBT has been given a Value grade of D.
Both SMGZY and CLBT 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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Cellebrite DI Ltd. (CLBT) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
