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

Investors with an interest in Utility - Water Supply stocks have likely encountered both Primo (PRMW) and American Water Works (AWK). 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.

Both Primo and American Water Works have a Zacks Rank of # 2 (Buy) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. However, value investors will care about much more than just this.

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.

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The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

PRMW currently has a forward P/E ratio of 20.86, while AWK has a forward P/E of 22.69. We also note that PRMW has a PEG ratio of 1.62. 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 2.84.

Another notable valuation metric for PRMW is its P/B ratio of 2.06. 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, AWK has a P/B of 2.36.

These are just a few of the metrics contributing to PRMW's Value grade of B and AWK's Value grade of D.

Both PRMW and AWK are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that PRMW is the superior value option right now.

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Primo Water Corporation (PRMW) : Free Stock Analysis Report

American Water Works Company, Inc. (AWK) : Free Stock Analysis Report

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Zacks Investment Research