Head-To-Head Analysis: Aris Water Solutions (NYSE:ARIS) and Waste Management (NYSE:WM)

Aris Water Solutions (NYSE:ARIS) and Waste Management (NYSE:WM) are both business services companies, but which is the superior business? We will compare the two companies based on the strength of their dividends, analyst recommendations, institutional ownership, risk, profitability, earnings and valuation.

Institutional and Insider Ownership

39.7% of Aris Water Solutions shares are owned by institutional investors. Comparatively, 80.4% of Waste Management shares are owned by institutional investors. 37.8% of Aris Water Solutions shares are owned by insiders. Comparatively, 0.2% of Waste Management shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares Aris Water Solutions and Waste Management”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Aris Water Solutions	$475.50 million	2.94	$26.86 million	$0.83	28.43
Waste Management	$24.78 billion	3.24	$2.75 billion	$6.35	31.41

Waste Management has higher revenue and earnings than Aris Water Solutions. Aris Water Solutions is trading at a lower price-to-earnings ratio than Waste Management, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Aris Water Solutions has a beta of 1.67, suggesting that its stock price is 67% more volatile than the S&P 500. Comparatively, Waste Management has a beta of 0.62, suggesting that its stock price is 38% less volatile than the S&P 500.

Dividends

Aris Water Solutions pays an annual dividend of $0.56 per share and has a dividend yield of 2.4%. Waste Management pays an annual dividend of $3.30 per share and has a dividend yield of 1.7%. Aris Water Solutions pays out 67.5% of its earnings in the form of a dividend. Waste Management pays out 52.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Aris Water Solutions has raised its dividend for 2 consecutive years and Waste Management has raised its dividend for 22 consecutive years.

Profitability

This table compares Aris Water Solutions and Waste Management’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Aris Water Solutions	6.00%	3.77%	1.99%
Waste Management	10.35%	33.00%	6.52%

Analyst Recommendations

This is a summary of current ratings and recommmendations for Aris Water Solutions and Waste Management, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Aris Water Solutions	0	8	2	0	2.20
Waste Management	0	9	14	3	2.77

Aris Water Solutions presently has a consensus target price of $26.50, suggesting a potential upside of 12.29%. Waste Management has a consensus target price of $248.44, suggesting a potential upside of 24.55%. Given Waste Management’s stronger consensus rating and higher possible upside, analysts clearly believe Waste Management is more favorable than Aris Water Solutions.

Summary

Waste Management beats Aris Water Solutions on 15 of the 18 factors compared between the two stocks.

About Aris Water Solutions

Aris Water Solutions, Inc., an environmental infrastructure and solutions company, provides water handling and recycling solutions. The company's produced water handling business gathers, transports, unless recycled, and handles produced water generated from oil and natural gas production. Its water solutions business develops and operates recycling facilities to treat, store, and recycle produced water. Aris Water Solutions, Inc. was founded in 2015 and is headquartered in Houston, Texas.

About Waste Management

Waste Management, Inc., through its subsidiaries, engages in the provision of environmental solutions to residential, commercial, industrial, and municipal customers in the United States and Canada. It offers collection services, including picking up and transporting waste and recyclable materials from where it was generated to a transfer station, material recovery facility (MRF), or disposal site; and owns and operates transfer stations, as well as owns, develops, and operates landfill facilities that produce landfill gas used as renewable natural gas for generating electricity. As of December 31, 2022, the company owned or operated 254 solid waste landfills, five secure hazardous waste landfills, 97 MRFs, and 337 transfer stations. It also provides materials processing and commodities recycling services at its MRFs, where cardboard, paper, glass, metals, plastics, construction and demolition materials, and other recycling commodities are recovered for resale or redirected for other purposes; recycling brokerage services, such as managing the marketing of recyclable materials for third parties; and other strategic business solutions. In addition, the company offers construction and remediation services; services related with the disposal of fly ash, and residue generated from the combustion of coal and other fuel stocks; in-plant services comprising full-service waste management solutions and consulting services; and specialized disposal services for oil and gas exploration and production operations. The company was formerly known as USA Waste Services, Inc. and changed its name to Waste Management, Inc. in 1998. Waste Management, Inc. was incorporated in 1987 and is headquartered in Houston, Texas.