How the Water Infrastructure Act Shapes the Outlook for Aris Water Solutions in 2025

If you have been eyeing Aris Water Solutions lately, you are not alone. The stock has quietly commanded attention among investors navigating the ever-evolving landscape of water infrastructure and ESG-focused businesses. With a closing price of $23.79, some are wondering if the market fully appreciates what is under the surface, or if there is untapped growth just waiting to be unlocked.

Looking at the numbers, Aris Water Solutions' journey over the past year has been nothing short of fascinating. The stock boasts an impressive 62.3% gain over the last 12 months. However, its year-to-date and recent weekly returns have dipped into mildly negative territory, suggesting a pause or a moment of recalibration by investors. The relatively flat 30-day move indicates that, right now, the market might be waiting for a new catalyst or simply reassessing the company's prospects after a big run higher in the previous year.

Recent market shifts in water management and sustainability trends may have sparked peaks of optimism. Not all valuation models agree that the stock is a compelling bargain at this time. In fact, Aris Water Solutions is flagged as undervalued in only 1 out of 6 commonly used valuation checks, giving it a valuation score of 1. But what does that really mean for your investment decision?

Let us dive into these valuation approaches so you can see exactly where the numbers line up and where they might fall short. Continue reading, because we will also share a powerful lens for looking at valuation that many overlook.

Aris Water Solutions scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Aris Water Solutions Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow (DCF) model estimates what a company is worth today by forecasting its future cash flows and then discounting those amounts back to the present. This approach is a fundamental way for investors to assess whether a stock is undervalued or overvalued based on its ability to generate cash over time.

For Aris Water Solutions, the current Free Cash Flow (FCF) stands at $30.87 million. Analysts have provided cash flow forecasts for the next five years. After this period, projections are extrapolated out to ten years using Simply Wall St's methodologies. Notably, FCF is projected to reach $97.7 million by the end of 2029. These projections are laid out year by year, capturing anticipated growth and providing a holistic view of future cash generation.

The DCF model applies a discount rate to these future flows, yielding an estimated intrinsic value per share of $26.52. With the current stock price at $23.79, this suggests Aris Water Solutions trades at around a 10.3% discount to its calculated fair value. This implies some undervaluation in the market according to this model.

Story Continues Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Aris Water Solutions.

ARIS Discounted Cash Flow as at Sep 2025 Our Discounted Cash Flow (DCF) analysis suggests Aris Water Solutions is undervalued by 10.3%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Aris Water Solutions Price vs Earnings (PE Ratio)

The Price-to-Earnings (PE) ratio is a favored tool for valuing profitable companies like Aris Water Solutions because it links a company's stock price to its earnings. This metric is especially informative for businesses with reliable profits, providing investors an easy way to gauge how expensive or cheap a stock is relative to its ability to generate income.

It is important to note that a "normal" or fair PE ratio will vary by company depending on expectations for future growth as well as perceived risks. Stocks with higher growth potential or lower risk typically warrant higher PE ratios, while slower growth or greater risk points may pull the multiple down.

As of today, Aris Water Solutions trades at a PE ratio of 29.2x. This stands well above the Energy Services industry average of 15.1x and its peer average of 22.6x. However, Simply Wall St's proprietary Fair Ratio, which incorporates the company’s earnings growth, size, profitability, and risk, sets an appropriate PE at 17.3x for Aris Water Solutions. The Fair Ratio is a more reliable yardstick than just looking at industry or peer multiples, as it adapts to a company’s unique performance and risk profile instead of grouping all similar businesses together.

Since Aris Water Solutions’ current PE of 29.2x is significantly higher than the Fair Ratio of 17.3x, this approach indicates that the stock is trading at a premium compared to what would be considered fair value according to its fundamentals.

Result: OVERVALUED

NYSE:ARIS PE Ratio as at Sep 2025 PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Aris Water Solutions Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives. A Narrative is your own story about a company, where you connect your perspective about things like future revenue, earnings, and profit margins to a reasoned forecast, and then directly to a fair value for the stock.

Unlike traditional ratios and models that only rely on past data, Narratives let you capture your personal take on what could drive the company forward or hold it back by incorporating assumptions about business developments, market trends, and risks. Narratives are accessible tools available on Simply Wall St's Community page used by millions of investors, making them easy to create and adjust as insights and information evolve.

This dynamic approach means your Narrative is automatically updated when new events such as earnings releases or major news change the underlying numbers or the business outlook, keeping your investment thesis fresh and relevant.

Narratives help you make buy or sell decisions by comparing your calculated Fair Value (based on your own expectations) to the current market Price. For example, two investors analyzing Aris Water Solutions might land on very different conclusions, with one forecasting robust growth and assigning a Fair Value near $34.04, while another takes a cautious view, resulting in a Fair Value of just $25.00.

Do you think there's more to the story for Aris Water Solutions? Create your own Narrative to let the Community know!

NYSE:ARIS Community Fair Values as at Sep 2025 This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include ARIS.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com

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