Is Select Water Solutions, Inc. overvalued or undervalued?

As of 9 May 2025, the valuation grade for Select Water Solutions, Inc. has moved from expensive to very expensive. The company is currently overvalued based on its financial metrics. The P/E ratio stands at 22, which is higher than the peer average of approximately 23.6 for comparable firms like Middlesex Water Co. (P/E of 23.1) and Aris Water Solutions, Inc. (P/E of 24.3). Additionally, the EV to EBITDA ratio of 5.66 is lower than the industry average, indicating potential concerns regarding profitability relative to enterprise value.
With a ROCE of 6.89% and ROE of 5.98%, Select Water Solutions, Inc. shows weaker returns compared to its peers, further supporting the overvaluation assessment. The company's stock has underperformed relative to the S&P 500 over the past year, with a return of -13.14% compared to the index's 10.26%. This trend reinforces the notion that the stock is not only overvalued but also struggling to deliver shareholder value in the current market environment.