Investors with an interest in Utility – Water Supply stocks have likely encountered both SJW (SJW – Free Report) and American States Water (AWR – Free Report) . 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
SJW has a Zacks Rank of #2 (Buy), while American States Water has a Zacks Rank of #4 (Sell) right now. This means that SJW’s earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. 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.
SJW currently has a forward P/E ratio of 17.99, while AWR has a forward P/E of 25.85. We also note that SJW has a PEG ratio of 3.89. 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. AWR currently has a PEG ratio of 6.34.
Another notable valuation metric for SJW is its P/B ratio of 1.23. Investors use the P/B ratio to look at a stock’s market value versus its book value, which is defined as total assets minus total liabilities. By comparison, AWR has a P/B of 3.32.
These are just a few of the metrics contributing to SJW’s Value grade of B and AWR’s Value grade of F.
SJW sticks out from AWR in both our Zacks Rank and Style Scores models, so value investors will likely feel that SJW is the better option right now.
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