Investors looking for stocks in the Utility - Water Supply sector might want to consider either Consolidated Water (CWCO) or Global Water Resources, Inc. (GWRS). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Consolidated Water has a Zacks Rank of #2 (Buy), while Global Water Resources, Inc. has a Zacks Rank of #4 (Sell) right now. Investors should feel comfortable knowing that CWCO likely has seen a stronger improvement to its earnings outlook than GWRS has recently. 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.
CWCO currently has a forward P/E ratio of 16.99, while GWRS has a forward P/E of 60.24. We also note that CWCO has a PEG ratio of 2.12. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. GWRS currently has a PEG ratio of 4.02.
Another notable valuation metric for CWCO is its P/B ratio of 1.14. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, GWRS has a P/B of 7.42.
These are just a few of the metrics contributing to CWCO's Value grade of B and GWRS's Value grade of F.
CWCO has seen stronger estimate revision activity and sports more attractive valuation metrics than GWRS, so it seems like value investors will conclude that CWCO is the superior option right now.
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