Middlesex Water (NASDAQ: MSEX) and The York Water (NASDAQ:YORW) are both small-cap utilities companies, but which is the superior stock? We will compare the two businesses based on the strength of their analyst recommendations, profitability, institutional ownership, dividends, earnings, valuation and risk.

Profitability

This table compares Middlesex Water and The York Water’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Middlesex Water 16.46% 9.95% 3.50%
The York Water 25.05% 10.52% 3.73%

Volatility and Risk

Middlesex Water has a beta of 0.41, meaning that its share price is 59% less volatile than the S&P 500. Comparatively, The York Water has a beta of 0.59, meaning that its share price is 41% less volatile than the S&P 500.

Valuation and Earnings

This table compares Middlesex Water and The York Water’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Middlesex Water $132.75 million 4.72 $52.96 million $1.33 28.81
The York Water $48.03 million 8.75 $28.97 million $0.93 35.16

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

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Middlesex Water and The York Water, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Middlesex Water 0 1 0 0 2.00
The York Water 0 0 0 0 N/A

Middlesex Water currently has a consensus price target of $39.00, indicating a potential upside of 1.77%. Given Middlesex Water’s higher possible upside, equities analysts plainly believe Middlesex Water is more favorable than The York Water.

Institutional and Insider Ownership

49.1% of Middlesex Water shares are held by institutional investors. Comparatively, 35.4% of The York Water shares are held by institutional investors. 3.5% of Middlesex Water shares are held by insiders. Comparatively, 1.1% of The York Water shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Dividends

Middlesex Water pays an annual dividend of $0.85 per share and has a dividend yield of 2.2%. The York Water pays an annual dividend of $0.64 per share and has a dividend yield of 2.0%. Middlesex Water pays out 63.9% of its earnings in the form of a dividend. The York Water pays out 68.8% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Middlesex Water is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Middlesex Water beats The York Water on 8 of the 14 factors compared between the two stocks.

Middlesex Water Company Profile

Middlesex Water Company is a water utility company. The Company owns and operates regulated water utility and wastewater systems in New Jersey, Delaware and Pennsylvania. The Company also operates water and wastewater systems under contract on behalf of municipal and private clients in New Jersey and Delaware. The Company’s segments include Regulated and Non-Regulated. The Regulated segment is engaged in the business of collecting, treating and distributing water on a retail and wholesale basis to residential, commercial, industrial and fire protection customers in parts of New Jersey, Delaware and Pennsylvania. The Non-Regulated segment primarily consists of non-regulated contract services for the operation and maintenance of municipal and private water and wastewater systems in New Jersey and Delaware. The Middlesex System treats, stores and distributes water for residential, commercial, industrial and fire protection purposes.

The York Water Company Profile

The York Water Company is an investor-owned water utility in the United States. The primary business of the Company is to impound, purify to meet or exceed safe drinking water standards and distribute water. As of December 31, 2016, it also owned and operated three wastewater collection systems and two wastewater treatment systems. As of December 31, 2016, it operated within its territory, which covered 39 municipalities within York County, Pennsylvania and nine municipalities within Adams County, Pennsylvania. Its two wastewater treatment facilities are located in East Manchester and Lower Windsor Townships. It provides sewer billing services. It has a service line protection program, which allows customers to pay a fixed monthly fee, and it will repair or replace damaged customer service lines. As of December 31, 2016, it obtained the bulk of its water supply from both the South Branch and East Branch of the Codorus Creek, which together had a daily flow of 73 million gallons.

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