Sims Metal Management (OTCMKTS:SMSMY) versus Aris Water Solutions (NYSE:ARIS) Critical Analysis

Sims Metal Management (OTCMKTS:SMSMY) and Aris Water Solutions (NYSE:ARIS) are both small-cap business services companies, but which is the better stock? We will compare the two companies based on the strength of their risk, profitability, earnings, institutional ownership, analyst recommendations, valuation and dividends.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Sims Metal Management and Aris Water Solutions, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sims Metal Management	1	0	0	0	1.00
Aris Water Solutions	0	8	2	0	2.20

Aris Water Solutions has a consensus target price of $26.50, indicating a potential upside of 12.29%. Given Aris Water Solutions’ stronger consensus rating and higher possible upside, analysts plainly believe Aris Water Solutions is more favorable than Sims Metal Management.

Volatility & Risk

Sims Metal Management has a beta of 1.24, suggesting that its share price is 24% more volatile than the S&P 500. Comparatively, Aris Water Solutions has a beta of 1.67, suggesting that its share price is 67% more volatile than the S&P 500.

Insider and Institutional Ownership

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

Earnings and Valuation

This table compares Sims Metal Management and Aris Water Solutions”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sims Metal Management	$4.85 billion	0.41	-$12.30 million	N/A	N/A
Aris Water Solutions	$475.50 million	2.94	$26.86 million	$0.83	28.43

Aris Water Solutions has lower revenue, but higher earnings than Sims Metal Management.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Sims Metal Management	N/A	N/A	N/A
Aris Water Solutions	6.00%	3.77%	1.99%

Dividends

Sims Metal Management pays an annual dividend of $0.13 per share and has a dividend yield of 1.3%. Aris Water Solutions pays an annual dividend of $0.56 per share and has a dividend yield of 2.4%. Aris Water Solutions pays out 67.5% of its earnings in the form of a dividend. Aris Water Solutions has increased its dividend for 2 consecutive years. Aris Water Solutions is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Aris Water Solutions beats Sims Metal Management on 13 of the 15 factors compared between the two stocks.

About Sims Metal Management

Sims Limited engages in buying, processing, and selling ferrous and non-ferrous recycled metals in Australia, Bangladesh, China, Turkey, the United States, and internationally. The company operates through six segments: North America Metals, Investment in SA Recycling, Australia/New Zealand Metals, UK Metals, Global Trading, and Sims Lifecycle Services. It is involved in the collection, processing, and trading of iron and steel secondary raw materials; and other metal alloys and residues, principally aluminum, lead, copper, zinc, and nickel bearing materials. The company also engages in the provision of environmentally responsible solutions for the disposal of post-consumer electronic products, such as information technology assets recycled for commercial customers; and environmentally responsible recycling of negative value materials, including electronic equipment. In addition, it provides secondary processing and other services comprising recycling of municipal curbside materials, stevedoring, and other sources of service. The company was founded in 1917 and is headquartered in Mascot, Australia.

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.