What a time it’s been for Aris Water. In the past six months alone, the company’s stock price has increased by a massive 56.8%, reaching $24.32 per share. This was partly thanks to its solid quarterly results, and the performance may have investors wondering how to approach the situation.

Is it too late to buy ARIS? Find out in our full research report, it’s free.

Why Is ARIS a Good Business?

Primarily serving the oil and gas industry, Aris Water (NYSE:ARIS) is a provider of water handling and recycling solutions.

1. Rising Sales Volumes Show Elevated Demand

Revenue growth can be broken down into changes in price and volume (the number of units sold). While both are important, volume is the lifeblood of a successful Air and Water Services company because there’s a ceiling to what customers will pay.

Aris Water’s units sold punched in at 145.1 million in the latest quarter, and over the last two years, averaged 10.3% year-on-year growth. This performance was solid and shows there is something unique about its products.

2. Outstanding Long-Term EPS Growth

Analyzing the long-term change in earnings per share (EPS) shows whether a company's incremental sales were profitable – for example, revenue could be inflated through excessive spending on advertising and promotions.

Aris Water’s EPS grew at an astounding 91.9% compounded annual growth rate over the last four years, higher than its 25.8% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

3. Increasing Free Cash Flow Margin Juices Financials

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

As you can see below, Aris Water’s margin expanded by 63.9 percentage points over the last five years. Aris Water’s free cash flow margin for the trailing 12 months was 4.2%.

Final Judgment

These are just a few reasons why Aris Water is a cream-of-the-crop industrials company, and after the recent rally, the stock trades at 17.4× forward price-to-earnings (or $24.32 per share). Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.

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