HTO or RSG: Which Is the Better Value Stock Right Now?

Investors with an interest in Waste Removal Services stocks have likely encountered both H20 (HTO) and Republic Services (RSG). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Right now, H20 is sporting a Zacks Rank of #2 (Buy), while Republic Services 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 HTO is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture for value investors.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies 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.

HTO currently has a forward P/E ratio of 19.86, while RSG has a forward P/E of 31.03. We also note that HTO has a PEG ratio of 3.03. 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. RSG currently has a PEG ratio of 3.71.

Another notable valuation metric for HTO 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, RSG has a P/B of 5.8.

These metrics, and several others, help HTO earn a Value grade of B, while RSG has been given a Value grade of C.

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

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H2O America (HTO): Free Stock Analysis Report

Republic Services, Inc. (RSG): Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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