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

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Investors interested in stocks from the Utility - Water Supply sector have probably already heard of Veolia Environnement SA (VEOEY - Free Report) and American Water Works (AWK - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Currently, Veolia Environnement SA has a Zacks Rank of #1 (Strong Buy), while American Water Works has a Zacks Rank of #2 (Buy). Investors should feel comfortable knowing that VEOEY likely has seen a stronger improvement to its earnings outlook than AWK has recently. But this is just one factor that value investors are interested in.

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 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.

VEOEY currently has a forward P/E ratio of 6.75, while AWK has a forward P/E of 24.93. We also note that VEOEY has a PEG ratio of 0.83. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. AWK currently has a PEG ratio of 3.05.

Another notable valuation metric for VEOEY is its P/B ratio of 1.26. 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, AWK has a P/B of 2.40.

Based on these metrics and many more, VEOEY holds a Value grade of A, while AWK has a Value grade of D.

VEOEY is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that VEOEY is likely the superior value option right now.


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American Water Works Company, Inc. (AWK) - free report >>

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