Is Select Water Solutions, Inc. overvalued or undervalued?

As of 7 July 2025, the valuation grade for Select Water Solutions, Inc. has moved from expensive to very expensive, indicating a significant shift in its perceived value. The company is currently considered overvalued, with a P/E ratio of 22, which is notably higher than its peers, such as Essential Utilities, Inc. at 16.89 and California Water Service Group at 20.41. Additionally, the EV to EBITDA ratio stands at 5.66, while its closest peer, American States Water Co., has a ratio of 15.88, further highlighting the premium at which Select Water Solutions is trading.
In terms of returns, Select Water Solutions has underperformed relative to the S&P 500 over the year, with a return of -10.55% compared to the S&P 500's 17.14%. This trend reinforces the notion that the stock may be overvalued, especially given that it has a high dividend yield of 304.54% and a low ROE of 5.98%, which suggests that the current price may not be justified by its financial performance.