PRMW vs. AWK: Which Stock Should Value Investors Buy Now?

Investors interested in stocks from the Utility - Water Supply sector have probably already heard of Primo (PRMW) and American Water Works (AWK). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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 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.

Both Primo and American Water Works have a Zacks Rank of # 2 (Buy) right now. 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 are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.

Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

PRMW currently has a forward P/E ratio of 20.44, while AWK has a forward P/E of 22.78. We also note that PRMW has a PEG ratio of 1.58. 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. AWK currently has a PEG ratio of 2.85.

Another notable valuation metric for PRMW is its P/B ratio of 2.01. 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, AWK has a P/B of 2.36.

These are just a few of the metrics contributing to PRMW's Value grade of B and AWK's Value grade of D.

Both PRMW and AWK are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that PRMW is the superior value option right now.

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Primo Water Corporation (PRMW) : Free Stock Analysis Report

American Water Works Company, Inc. (AWK) : Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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