Investors interested in stocks from the Waste Removal Services sector have probably already heard of Montrose Environmental (MEG) and Zurn Water (ZWS). But which of these two stocks presents investors with the better value opportunity right now? Let's 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 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, Montrose Environmental has a Zacks Rank of #2 (Buy), while Zurn Water 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 MEG has an improving earnings outlook. However, value investors will care about much more than just this.
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.
MEG currently has a forward P/E ratio of 16.27, while ZWS has a forward P/E of 28.23. We also note that MEG has a PEG ratio of 0.85. 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. ZWS currently has a PEG ratio of 2.01.
Another notable valuation metric for MEG is its P/B ratio of 1.98. 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, ZWS has a P/B of 4.91.
Based on these metrics and many more, MEG holds a Value grade of B, while ZWS has a Value grade of C.
MEG stands above ZWS thanks to its solid earnings outlook, and based on these valuation figures, we also feel that MEG is the superior value option right now.
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Montrose Environmental Group, Inc. (MEG): Free Stock Analysis Report Zurn Elkay Water Solutions Cor (ZWS): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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