Investors looking for stocks in the Waste Removal Services sector might want to consider either H20 (HTO) or Waste Management (WM). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, H20 is sporting a Zacks Rank of #2 (Buy), while Waste Management has a Zacks Rank of #3 (Hold). 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 only part of the picture for value investors.
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.
HTO currently has a forward P/E ratio of 16.45, while WM has a forward P/E of 28.80. We also note that HTO has a PEG ratio of 2.51. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. WM currently has a PEG ratio of 2.67.
Another notable valuation metric for HTO is its P/B ratio of 1.15. 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 9.16.
Based on these metrics and many more, HTO holds a Value grade of A, while WM has a Value grade of C.
HTO 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 HTO is likely the superior value option right now.
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H2O America (HTO): Free Stock Analysis Report Waste Management, Inc. (WM): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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