Is Aris Water Solutions, Inc. overvalued or undervalued?

As of 10 October 2025, the valuation grade for Aris Water Solutions, Inc. moved from very expensive to expensive. The company is currently considered overvalued based on its P/E ratio of 23, which is higher than the industry average, and an EV to EBITDA ratio of 10.26, indicating a premium compared to peers like Essential Utilities, Inc. with a P/E of 16.89 and an EV to EBITDA of 14.36. Additionally, the PEG ratio stands at 1.78, suggesting that the stock may not be justified by its growth prospects.
In terms of performance, Aris Water Solutions, Inc. has underperformed relative to the S&P 500 over the year-to-date period, returning -2.88% compared to the S&P 500's 11.41%. However, it has outperformed the index over the past year with a return of 36.34% versus the S&P 500's 13.36%. Overall, the high valuation ratios and recent stock performance indicate that the company may be overvalued in the current market.