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VEOEY vs. GWRS: Which Stock Should Value Investors Buy Now?

Zacks

Investors with an interest in Utility – Water Supply stocks have likely encountered both Veolia Environnement SA (VEOEY) and Global Water Resources, Inc. (GWRS). But which of these two companies is the best option for those looking for undervalued stocks? Let’s take a closer look.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Currently, Veolia Environnement SA has a Zacks Rank of #2 (Buy), while Global Water Resources, Inc. has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that VEOEY likely has seen a stronger improvement to its earnings outlook than GWRS has recently. But this is just one factor that value investors are interested in.

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 grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

VEOEY currently has a forward P/E ratio of 13.30, while GWRS has a forward P/E of 57.25. We also note that VEOEY has a PEG ratio of 1.32. 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. GWRS currently has a PEG ratio of 3.82.

Another notable valuation metric for VEOEY is its P/B ratio of 1.49. 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, GWRS has a P/B of 6.68.

These are just a few of the metrics contributing to VEOEY’s Value grade of A and GWRS’s Value grade of D.

VEOEY 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 VEOEY is likely the superior value option right now.


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