Consolidated Water Co. (NASDAQ: CWCO) and American Water Works (NYSE:AWK) are both utilities companies, but which is the better business? We will contrast the two businesses based on the strength of their risk, valuation, profitabiliy, earnings, analyst recommendations, institutional ownership and dividends.

Insider and Institutional Ownership

51.4% of Consolidated Water Co. shares are owned by institutional investors. Comparatively, 81.1% of American Water Works shares are owned by institutional investors. 3.2% of Consolidated Water Co. shares are owned by company insiders. Comparatively, 0.3% of American Water Works shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares Consolidated Water Co. and American Water Works’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Consolidated Water Co. 7.62% 5.34% 5.02%
American Water Works 14.20% 9.70% 2.77%

Volatility and Risk

Consolidated Water Co. has a beta of 0.87, suggesting that its share price is 13% less volatile than the S&P 500. Comparatively, American Water Works has a beta of 0.25, suggesting that its share price is 75% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current recommendations for Consolidated Water Co. and American Water Works, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Consolidated Water Co. 0 0 1 0 3.00
American Water Works 0 4 4 0 2.50

Consolidated Water Co. presently has a consensus target price of $15.00, indicating a potential upside of 17.19%. American Water Works has a consensus target price of $81.67, indicating a potential upside of 0.34%. Given Consolidated Water Co.’s stronger consensus rating and higher probable upside, analysts plainly believe Consolidated Water Co. is more favorable than American Water Works.

Dividends

Consolidated Water Co. pays an annual dividend of $0.30 per share and has a dividend yield of 2.3%. American Water Works pays an annual dividend of $1.66 per share and has a dividend yield of 2.0%. Consolidated Water Co. pays out 96.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. American Water Works pays out 62.6% of its earnings in the form of a dividend. Consolidated Water Co. has increased its dividend for 8 consecutive years. Consolidated Water Co. is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation & Earnings

This table compares Consolidated Water Co. and American Water Works’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Consolidated Water Co. $59.52 million 3.20 $13.25 million $0.31 41.29
American Water Works $3.33 billion 4.35 $1.66 billion $2.65 30.71

American Water Works has higher revenue and earnings than Consolidated Water Co.. American Water Works is trading at a lower price-to-earnings ratio than Consolidated Water Co., indicating that it is currently the more affordable of the two stocks.

Summary

American Water Works beats Consolidated Water Co. on 10 of the 17 factors compared between the two stocks.

Consolidated Water Co. Company Profile

Consolidated Water Co. Ltd. develops and operates seawater desalination plants (that utilize reverse osmosis technology) and water distribution systems in areas where naturally occurring supplies of potable water are scarce or non-existent. The Company operates in three segments: retail water operations, bulk water operations and services operations. The retail water operations segment produces and supplies water to end users, including residential, commercial and government customers. The bulk water operations segment produces potable water from seawater and sells this water to governments and private customers. The services operations segment provides engineering and management services, including designing and constructing desalination plants, and managing and operating plants owned by affiliated companies. Through its subsidiaries and affiliates, it provides various services to its customers in the Cayman Islands, The Bahamas, Belize, the British Virgin Islands and Indonesia.

American Water Works Company Profile

American Water Works Company, Inc. is a holding company for regulated and market-based subsidiaries throughout the United States and Ontario, Canada. The Company’s Regulated Businesses segment provides water and wastewater services as public utilities in 16 states in the United States as of December 31, 2016. The Market-Based Businesses consists of four segments, including Military Services Group, which conducts operation and maintenance (O&M) of water and wastewater systems for military bases; Contract Operations Group, which conducts O&M of water and wastewater facilities for municipalities and the food and beverage industry; Homeowner Services Group, which primarily provides water and sewer line protection plans for homeowners, and Keystone, which provides water services for natural gas exploration and production companies. The Company, through its subsidiary, American Water Works Service Company, Inc. provides support and operational services for its operating subsidiaries.

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