Investors interested in Waste Removal Services stocks are likely familiar with H20 (HTO) and Waste Management (WM). 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.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive 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.
H20 and Waste Management are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that HTO has an improving earnings outlook. But this is just one piece of the puzzle for value investors.
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 Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
HTO currently has a forward P/E ratio of 15.55, while WM has a forward P/E of 26.54. We also note that HTO has a PEG ratio of 2.38. 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. WM currently has a PEG ratio of 2.46.
Another notable valuation metric for HTO is its P/B ratio of 1.09. 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 8.45.
These are just a few of the metrics contributing to HTO's Value grade of A and WM's Value grade of C.
HTO has seen stronger estimate revision activity and sports more attractive valuation metrics than WM, so it seems like value investors will conclude that HTO is the superior option right now.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
H2O America (HTO): Free Stock Analysis Report Waste Management, Inc. (WM): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
