Investors interested in Utility - Water Supply stocks are likely familiar with Consolidated Water (CWCO - Free Report) and Global Water Resources, Inc. (GWRS - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? 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 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.
Currently, Consolidated Water has a Zacks Rank of #2 (Buy), while Global Water Resources, Inc. has a Zacks Rank of #4 (Sell). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that CWCO is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle for value investors.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
CWCO currently has a forward P/E ratio of 15.62, while GWRS has a forward P/E of 59.24. We also note that CWCO has a PEG ratio of 1.95. 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. GWRS currently has a PEG ratio of 3.95.
Another notable valuation metric for CWCO is its P/B ratio of 1.07. 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 7.34.
Based on these metrics and many more, CWCO holds a Value grade of B, while GWRS has a Value grade of F.
CWCO stands above GWRS thanks to its solid earnings outlook, and based on these valuation figures, we also feel that CWCO is the superior value option right now.