HSC vs. SMGZY: Which Stock Is the Better Value Option?
Zacks Investment Research | Jan 27, 2021 11:40PM ET
Investors with an interest in Technology Services stocks have likely encountered both Harsco (NYSE:HSC) and Smiths Group PLC (OTC:SMGZY). But which of these two stocks presents investors with the better value opportunity right now? 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, Harsco is sporting a Zacks Rank of #2 (Buy), while Smiths Group PLC has a Zacks Rank of #5 (Strong Sell). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that HSC is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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.
HSC currently has a forward P/E ratio of 23.07, while SMGZY has a forward P/E of 30.49. We also note that HSC has a PEG ratio of 2.31. 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. SMGZY currently has a PEG ratio of 10.30.
Another notable valuation metric for HSC is its P/B ratio of 1.82. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, SMGZY has a P/B of 2.64.
Based on these metrics and many more, HSC holds a Value grade of B, while SMGZY has a Value grade of C.
HSC sticks out from SMGZY in both our Zacks Rank and Style Scores models, so value investors will likely feel that HSC is the better option right now.
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