Artesian Resources (NASDAQ: ARTNA) and American States Water (NYSE:AWR) are both small-cap utilities companies, but which is the better investment? We will contrast the two businesses based on the strength of their dividends, earnings, institutional ownership, analyst recommendations, risk, valuation and profitability.

Dividends

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Artesian Resources pays an annual dividend of $0.94 per share and has a dividend yield of 2.5%. American States Water pays an annual dividend of $1.02 per share and has a dividend yield of 1.9%. Artesian Resources pays out 40.9% of its earnings in the form of a dividend. American States Water pays out 59.6% 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. American States Water has raised its dividend for 63 consecutive years. Artesian Resources is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Artesian Resources and American States Water’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Artesian Resources 17.00% 10.36% 3.13%
American States Water 15.74% 13.50% 4.77%

Analyst Ratings

This is a summary of recent ratings and recommmendations for Artesian Resources and American States Water, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Artesian Resources 0 1 0 0 2.00
American States Water 2 1 0 0 1.33

Artesian Resources currently has a consensus price target of $41.00, indicating a potential upside of 10.81%. American States Water has a consensus price target of $45.00, indicating a potential downside of 16.79%. Given Artesian Resources’ stronger consensus rating and higher possible upside, equities research analysts clearly believe Artesian Resources is more favorable than American States Water.

Institutional and Insider Ownership

38.7% of Artesian Resources shares are held by institutional investors. Comparatively, 66.2% of American States Water shares are held by institutional investors. 20.6% of Artesian Resources shares are held by company insiders. Comparatively, 1.4% of American States Water shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Risk & Volatility

Artesian Resources has a beta of 0.1, indicating that its share price is 90% less volatile than the S&P 500. Comparatively, American States Water has a beta of 0.38, indicating that its share price is 62% less volatile than the S&P 500.

Earnings & Valuation

This table compares Artesian Resources and American States Water’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Artesian Resources $82.24 million 4.15 $13.98 million $2.30 16.09
American States Water $440.60 million 4.51 $69.36 million $1.71 31.63

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

Summary

American States Water beats Artesian Resources on 9 of the 16 factors compared between the two stocks.

About Artesian Resources

Artesian Resources Corporation, through its subsidiaries, provides water, wastewater, and other services on the Delmarva Peninsula. The company distributes and sells water to residential, commercial, industrial, governmental, municipal, and utility customers, as well as for public and private fire protection in the states of Delaware, Maryland, and Pennsylvania; and offers wastewater services to customers in Delaware. It also provides contract water and wastewater services; water, sewer, and internal service line protection plans; and wastewater management services, as well as design, construction, and engineering services. In addition, the company offers services to other water utilities, including operations and billing functions; and owns real estate properties, including land for office buildings, a water treatment plant, and wastewater facility. As of December 31, 2017, it served approximately 84,200 metered water customers in Delaware, 2,300 metered water customers in Maryland, and 40 customers in Pennsylvania through 1,293 miles of transmission and distribution mains. Artesian Resources Corporation was founded in 1905 and is headquartered in Newark, Delaware.

About American States Water

American States Water Company, through its subsidiaries, provides water and electric services to residential, industrial, and other customers in the United States. It operates through three segments: Water, Electric, and Contracted Services. The company purchases, produces, distributes, and sells water, as well as distributes electricity. As of February 26, 2018, it provided water service to approximately 259,000 customers located throughout 10 counties in Northern, Coastal, and Southern California; and distributed electricity to 24,000 customers in the City of Big Bear and surrounding areas in San Bernardino County, California. The company also provides water and/or wastewater services, including the operation, maintenance, and construction of facilities at the water and/or wastewater systems at various military installations. American States Water Company was founded in 1929 and is based in San Dimas, California.

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