FUTU vs. SPXC: Which Stock Is the Better Value Option?

Investors interested in stocks from the Technology Services sector have probably already heard of Futu Holdings Limited Sponsored ADR (FUTU) and SPX Technologies (SPXC). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Futu Holdings Limited Sponsored ADR has a Zacks Rank of #1 (Strong Buy), while SPX Technologies has a Zacks Rank of #2 (Buy) right now. This means that FUTU's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle 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.

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.

FUTU currently has a forward P/E ratio of 11.51, while SPXC has a forward P/E of 20.89. We also note that FUTU has a PEG ratio of 0.50. 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. SPXC currently has a PEG ratio of 1.16.

Another notable valuation metric for FUTU is its P/B ratio of 3.04. 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, SPXC has a P/B of 4.30.

These are just a few of the metrics contributing to FUTU's Value grade of A and SPXC's Value grade of C.

FUTU has seen stronger estimate revision activity and sports more attractive valuation metrics than SPXC, so it seems like value investors will conclude that FUTU is the superior option right now.

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This article originally published on Zacks Investment Research (zacks.com).

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