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

Investors with an interest in Waste Removal Services stocks have likely encountered both Montrose Environmental (MEG) 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.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Montrose Environmental and Waste Management are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that MEG likely has seen a stronger improvement to its earnings outlook than WM has recently. 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.

MEG currently has a forward P/E ratio of 17.13, while WM has a forward P/E of 29.88. We also note that MEG has a PEG ratio of 0.91. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. WM currently has a PEG ratio of 2.57.

Another notable valuation metric for MEG is its P/B ratio of 2.22. 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, WM has a P/B of 9.82.

These are just a few of the metrics contributing to MEG's Value grade of B and WM's Value grade of C.

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