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VEOEY vs. AWK: Which Stock Is the Better Value Option?

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Investors with an interest in Utility - Water Supply stocks have likely encountered both Veolia Environnement SA (VEOEY - Free Report) and American Water Works (AWK - Free Report) . 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Veolia Environnement SA and American Water Works are sporting Zacks Ranks of #1 (Strong Buy) and #3 (Hold), respectively, right now. 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 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 8.24, while AWK has a forward P/E of 30.10. We also note that VEOEY has a PEG ratio of 0.71. 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. AWK currently has a PEG ratio of 3.66.

Another notable valuation metric for VEOEY is its P/B ratio of 1.36. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, AWK has a P/B of 2.93.

Based on these metrics and many more, VEOEY holds a Value grade of A, while AWK has a Value grade of D.

VEOEY has seen stronger estimate revision activity and sports more attractive valuation metrics than AWK, so it seems like value investors will conclude that VEOEY is the superior option right now.


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American Water Works Company, Inc. (AWK) - free report >>

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