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

Zacks Equity Research
·2-min read

Investors with an interest in Waste Removal Services stocks have likely encountered both Republic Services (RSG) and Waste Management (WM). But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Currently, Republic Services has a Zacks Rank of #1 (Strong Buy), while Waste Management has a Zacks Rank of #3 (Hold). This means that RSG's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.

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.

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The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

RSG currently has a forward P/E ratio of 25.02, while WM has a forward P/E of 25.21. We also note that RSG has a PEG ratio of 2.66. 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. WM currently has a PEG ratio of 3.43.

Another notable valuation metric for RSG is its P/B ratio of 3.56. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, WM has a P/B of 6.78.

Based on these metrics and many more, RSG holds a Value grade of B, while WM has a Value grade of C.

RSG stands above WM thanks to its solid earnings outlook, and based on these valuation figures, we also feel that RSG is the superior value option right now.


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