Is Aris Water Solutions, Inc. overvalued or undervalued?

As of 7 August 2025, the valuation grade for Aris Water Solutions, Inc. has moved from expensive to very expensive, indicating a significant increase in perceived overvaluation. The company appears to be overvalued based on its P/E ratio of 23, which is higher than the peer average of 21.89 for companies like Consolidated Water Co. Ltd. and The York Water Co. Additionally, the EV to EBITDA ratio stands at 10.26, compared to the peer average of 9.63, and the Price to Book Value is 3.61, suggesting a premium over its peers.
In terms of returns, Aris Water Solutions, Inc. has outperformed the S&P 500 over the past year with a return of 44.31% compared to the S&P's 17.14%, but it has lagged behind over longer periods such as 3 years, where it returned 51.82% versus the S&P's 70.41%. Given the high valuation ratios and the recent grade change, the company is considered overvalued in the current market context.