Aris Water Solutions may be overvalued with mixed growth prospects, but the 10 analysts following the company give it an average rating of buy. The analysts have set target prices ranging from $12.5 to $20.0 per share, for an average of $14.95. At today's price of $7.89, Aris Water Solutions is trading -47.19% away from its average target price, suggesting there is an analyst consensus of strong upside potential.
Aris Water Solutions, Inc., an environmental infrastructure and solutions company, provides water handling and recycling solutions. Based in Houston, TX, the small-cap Utilities company has 196 full time employees. Aris Water Solutions has offered a 4.6% dividend yield over the last 12 months.
Aris Water Solutions has a trailing twelve month P/E ratio of 197.4, compared to an average of 22.89 for the Utilities sector. Based on its EPS guidance of 1.05, the company has a forward P/E ratio of 7.5. Based on the average annual growth rate of Aris Water Solutions's historical and projected earnings per share, which is 623.5%, the company's PEG ratio is 0.32. This suggests that its shares are undervalued.
Additionally, the market is undervaluing Aris Water Solutions in terms of its equity because its P/B ratio is 0.8. In comparison, the sector average is 1.03.
The question is, why does Aris Water Solutions have a good rating if it is so overvalued in terms of traditional metrics? One reason could be the company's excellent rate of margin growth, which in the analysts' opinion, will continue in coming years.
| 2019-12-31 | 2020-12-31 | 2021-12-31 | 2022-12-31 | |
|---|---|---|---|---|
| Revenue (k) | $118,793 | $171,472 | $229,251 | $321,001 |
| Revenue Growth | n/a | 44.35% | 33.7% | 40.02% |
| Gross Margins | 22.8% | 18.7% | 33.8% | 35.5% |
| Gross Margins Growth | n/a | -17.98% | 80.75% | 5.03% |
| Operating Margins | 11.4% | 5.8% | 20.8% | 21.2% |
| Operating Margins Growth | n/a | -49.12% | 258.62% | 1.92% |
| Net Margins | 10.99% | 0.0% | -4.02% | 0.53% |
| Net Margins Growth | n/a | -100.0% | n/a | 113.18% |
| Earnings Per Share | $0.74 | -$0.24 | $0.05 | $0.04 |
| EPS Growth | n/a | -132.43% | 120.83% | -20.0% |
| Diluted Shares (MM) | 18 | 18 | 21 | 31 |
| Free Cash Flow (k) | -$178,815 | -$71,818 | -$15,852 | -$76,312 |
| FCF Growth | n/a | 59.84% | 77.93% | -381.4% |
| Capital Expenditures (k) | -$182,964 | -$139,589 | -$74,664 | -$146,525 |
| Net Debt / EBITDA | 6.45 | 5.04 | 2.43 | 2.88 |
