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Investors interested in stocks from the Utility - Water Supply sector have probably already heard of Sabesp (SBS) and Global Water Resources, Inc. (GWRS). But which of these two stocks presents investors with the better value opportunity right now? 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 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.
Sabesp has a Zacks Rank of #2 (Buy), while Global Water Resources, Inc. has a Zacks Rank of #4 (Sell) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that SBS is likely seeing its earnings outlook improve to a greater extent. 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.
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.
SBS currently has a forward P/E ratio of 11.68, while GWRS has a forward P/E of 43.58. We also note that SBS has a PEG ratio of 0.55. 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. GWRS currently has a PEG ratio of 2.91.
Another notable valuation metric for SBS is its P/B ratio of 1.55. 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 6.30.
These are just a few of the metrics contributing to SBS's Value grade of A and GWRS's Value grade of D.
SBS sticks out from GWRS in both our Zacks Rank and Style Scores models, so value investors will likely feel that SBS is the better option right now.
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Companhia de saneamento Basico Do Estado De Sao Paulo - Sabesp (SBS) : Free Stock Analysis Report