Analyzing Essential Utilities (NYSE:WTRG) & Guangdong Investment (OTCMKTS:GGDVY)

Guangdong Investment (OTCMKTS:GGDVY) and Essential Utilities (NYSE:WTRG) are both utilities companies, but which is the better investment? We will contrast the two companies based on the strength of their profitability, institutional ownership, analyst recommendations, risk, valuation, earnings and dividends.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Guangdong Investment and Essential Utilities, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Guangdong Investment	0	0	0	0	0.00
Essential Utilities	1	4	2	2	2.56

Essential Utilities has a consensus target price of $43.00, indicating a potential upside of 4.78%. Given Essential Utilities’ stronger consensus rating and higher probable upside, analysts clearly believe Essential Utilities is more favorable than Guangdong Investment.

Profitability

This table compares Guangdong Investment and Essential Utilities’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Guangdong Investment	N/A	N/A	N/A
Essential Utilities	21.60%	8.23%	2.91%

Institutional & Insider Ownership

0.0% of Guangdong Investment shares are held by institutional investors. Comparatively, 74.8% of Essential Utilities shares are held by institutional investors. 0.4% of Essential Utilities shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Valuation and Earnings

This table compares Guangdong Investment and Essential Utilities”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Guangdong Investment	N/A	N/A	N/A	$35.70	1.45
Essential Utilities	$2.47 billion	4.71	$616.37 million	$1.96	20.94

Essential Utilities has higher revenue and earnings than Guangdong Investment. Guangdong Investment is trading at a lower price-to-earnings ratio than Essential Utilities, indicating that it is currently the more affordable of the two stocks.

Dividends

Guangdong Investment pays an annual dividend of $10.76 per share and has a dividend yield of 20.8%. Essential Utilities pays an annual dividend of $1.44 per share and has a dividend yield of 3.5%. Guangdong Investment pays out 30.1% of its earnings in the form of a dividend. Essential Utilities pays out 73.5% 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. Essential Utilities has raised its dividend for 32 consecutive years. Guangdong Investment is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Essential Utilities beats Guangdong Investment on 12 of the 15 factors compared between the two stocks.

About Guangdong Investment

Guangdong Investment Limited, an investment holding company, engages in water resources, property investment and development, department store operation, hotel ownership, energy project operation and management, and road and bridge operation businesses. The company's Water Resources segment provides water distribution, sewage treatment, water pipeline installation and consultancy services, constructs water supply and sewage treatment infrastructure, and sells machineries in Mainland China and Hong Kong. Its Property Investment and Development segment invests in and rents various properties in Hong Kong and Mainland China; and develops and sells properties in Mainland China. This segment provides property management services for various commercial properties. The company's Department Stores Operation segment operates department stores in Mainland China. Its Electric Power Generation segment operates coal-fired power plants that supply electricity and steam in the Guangdong province, Mainland China. The company's Hotel Operation and Management segment operate hotels and provides hotel management services to third parties in Hong Kong and Mainland China. Its Road and Bridge segment invests in various road and bridge projects, which engages in the toll road operation and road management in Mainland China. The company's Others segment provides treasury services in Hong Kong and Mainland China, as well as corporate and other related services. It offers financing, marketing management, environmental engineering, and water technology development and consultation services. The company was formerly known as Union Globe Development Limited and changed its name to Guangdong Investment Limited in January 1987. The company was incorporated in 1973 and is based in Central, Hong Kong. Guangdong Investment Limited operates as a subsidiary of GDH Limited.

About Essential Utilities

Essential Utilities, Inc., through its subsidiaries, operates regulated utilities that provide water, wastewater, or natural gas services in the United States. The company operates through Regulated Water and Regulated Natural Gas segments. It offers water services through operating and maintenance contract with municipal authorities and other parties. In addition, the company provides utility service line protection solutions and repair services to households. It serves approximately 5.5 million residential water, commercial water, fire protection, industrial water, wastewater, and other water and utility customers in Pennsylvania, Ohio, Texas, Illinois, North Carolina, New Jersey, Indiana, Virginia, and Kentucky under the Aqua and Peoples brands. The company was formerly known as Aqua America, Inc. and changed its name to Essential Utilities, Inc. in February 2020. Essential Utilities, Inc. was founded in 1886 and is headquartered in Bryn Mawr, Pennsylvania.