Investors interested in Utility - Water Supply stocks are likely familiar with Veolia Environnement SA (VEOEY) and Global Water Resources, Inc. (GWRS). 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Veolia Environnement SA and Global Water Resources, Inc. are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that VEOEY is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.
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.
VEOEY currently has a forward P/E ratio of 18.21, while GWRS has a forward P/E of 78. We also note that VEOEY has a PEG ratio of 1.88. 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. GWRS currently has a PEG ratio of 5.20.
Another notable valuation metric for VEOEY is its P/B ratio of 2.10. 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, GWRS has a P/B of 10.20.
Based on these metrics and many more, VEOEY holds a Value grade of A, while GWRS has a Value grade of D.
VEOEY sticks out from GWRS in both our Zacks Rank and Style Scores models, so value investors will likely feel that VEOEY is the better option right now.
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Veolia Environnement SA (VEOEY) : Free Stock Analysis Report
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