Investors with an interest in Waste Removal Services stocks have likely encountered both Veolia Environnement SA (VEOEY) 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, Veolia Environnement SA is sporting a Zacks Rank of #2 (Buy), while Waste Management has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that VEOEY is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its 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.
VEOEY currently has a forward P/E ratio of 12.95, while WM has a forward P/E of 26.55. We also note that VEOEY has a PEG ratio of 1.43. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. WM currently has a PEG ratio of 2.74.
Another notable valuation metric for VEOEY is its P/B ratio of 1.8. 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, WM has a P/B of 8.69.
These are just a few of the metrics contributing to VEOEY's Value grade of A and WM's Value grade of C.
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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Veolia Environnement SA (VEOEY): Free Stock Analysis Report
Waste Management, Inc. (WM): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).