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HTO vs. WM: Which Stock Should Value Investors Buy Now?

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Investors with an interest in Waste Removal Services stocks have likely encountered both H20 (HTO - Free Report) and Waste Management (WM - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

H20 has a Zacks Rank of #2 (Buy), while Waste Management has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that HTO is likely seeing its earnings outlook improve to a greater extent. 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.

HTO currently has a forward P/E ratio of 15.45, while WM has a forward P/E of 28.05. We also note that HTO has a PEG ratio of 2.36. 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. WM currently has a PEG ratio of 2.60.

Another notable valuation metric for HTO is its P/B ratio of 1.08. 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, WM has a P/B of 8.94.

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

HTO sticks out from WM in both our Zacks Rank and Style Scores models, so value investors will likely feel that HTO is the better option right now.


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