Is it time to consider buying Aris Water Solutions, Inc. (NYSE:ARIS)?

Although Aris Water Solutions, Inc. (NYSE:ARIS) may not have the largest market capitalization in the market, it has received a lot of attention due to a substantial price increase on the New York Stock Exchange. York in recent months. The company is now trading at high annual levels following the recent rise in its stock price. As a stock with heavy analyst coverage, you can assume that any recent changes in the company’s outlook are already priced into the stock. However, what if the stock is still a bargain? Let’s take a look at Aris Water Solutions’ outlook and value based on the most recent financial data to see if the opportunity still exists.

Check out our latest analysis for Aris Water Solutions

What is the opportunity offered by Aris Water Solutions?

The stock price looks reasonable at the moment according to our price multiple model, in which we compare the company’s price-to-earnings ratio to the industry average. We used the price-to-earnings ratio in this case because there is not enough visibility to forecast its cash flows. The stock’s ratio of 26.86x is currently trading slightly below its industry peers’ ratio of 27.75x, meaning if you buy Aris Water Solutions today, you’ll be paying a reasonable price. And if you think Aris Water Solutions should trade at this level in the long term, then there’s not much upside to be gained over other industry peers. So, is there another chance to buy low in the future? Since Aris Water Solutions stock is quite volatile (meaning its price movements are magnified relative to the rest of the market), this could mean that the price can fall, giving us the possibility of purchasing later. This is based on its high beta, which is a good indicator of stock price volatility.

Can we expect growth from Aris Water Solutions?

NYSE:ARIS Earnings and Revenue Growth May 8, 2024

Investors looking for growth in their portfolio may want to consider a company’s prospects before buying its shares. Although value investors argue that it’s the intrinsic value relative to the price that matters most, a more compelling investment thesis would be high growth potential at a cheap price. With profits expected to more than double over the next two years, the future looks bright for Aris Water Solutions. It looks like higher cash flow is on the cards for the stock, which should translate into a higher share valuation.

What this means for you

Are you a shareholder? It appears the market has already priced in ARIS’s positive outlook, with shares trading around industry price multiples. However, there are also other important factors that we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you consulted ARIS? Will you have enough confidence to invest in the company if the price falls below the industry PE ratio?

Are you a potential investor? If you’ve been keeping an eye on ARIS, now may not be the most advantageous time to buy, given that it’s trading around industry price multiples. However, the optimistic forecast is encouraging for ARIS, meaning it is worth digging deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

If you want to learn more about Aris Water Solutions as a company, it’s important to be aware of the risks it faces. For example, we identified 2 warning signs for Aris Water Solutions (1 makes us a little uncomfortable) you should be familiar.

If Aris Water Solutions no longer interests you, you can use our free platform to consult our list of more than 50 other stocks with high growth potential.

The assessment is complex, but we help to simplify it.

Find out if Aris Water Solutions is potentially overvalued or undervalued by checking out our full analysis, which includes fair value estimates, risks and warnings, dividends, insider trading and financial health.

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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to constitute financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your objectives or your financial situation. Our goal is to provide you with targeted, long-term analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.