Analyzing Pennon Group (OTCMKTS:PEGRF) & Middlesex Water (NASDAQ:MSEX)

Middlesex Water (NASDAQ:MSEX) and Pennon Group (OTCMKTS:PEGRF) are both utilities companies, but which is the better investment? We will compare the two companies based on the strength of their dividends, risk, institutional ownership, analyst recommendations, earnings, valuation and profitability.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Middlesex Water	23.26%	9.59%	3.48%
Pennon Group	N/A	N/A	N/A

Dividends

Middlesex Water pays an annual dividend of $1.44 per share and has a dividend yield of 2.5%. Pennon Group pays an annual dividend of $0.30 per share and has a dividend yield of 4.9%. Middlesex Water pays out 55.6% of its earnings in the form of a dividend. Pennon Group pays out 104.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Middlesex Water has raised its dividend for 52 consecutive years.

Institutional & Insider Ownership

79.5% of Middlesex Water shares are owned by institutional investors. Comparatively, 44.0% of Pennon Group shares are owned by institutional investors. 1.9% of Middlesex Water shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Valuation and Earnings

This table compares Middlesex Water and Pennon Group”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Middlesex Water	$194.69 million	5.64	$42.82 million	$2.59	22.49
Pennon Group	N/A	N/A	N/A	$0.29	21.45

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

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Middlesex Water and Pennon Group, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Middlesex Water	0	1	1	0	2.50
Pennon Group	0	1	4	0	2.80

Middlesex Water currently has a consensus price target of $61.67, suggesting a potential upside of 5.85%. Given Middlesex Water’s higher possible upside, equities research analysts plainly believe Middlesex Water is more favorable than Pennon Group.

Summary

Middlesex Water beats Pennon Group on 11 of the 14 factors compared between the two stocks.

About Middlesex Water

Middlesex Water Company owns and operates regulated water utility and wastewater systems. It operates in Regulated and Non-Regulated segments. The Regulated segment collects, treats, and distributes water on a retail and wholesale basis to residential, commercial, industrial, and fire protection customers, as well as provides regulated wastewater systems in New Jersey and Delaware. The Non-Regulated segment provides non-regulated contract services for the operation and maintenance of municipal and private water and wastewater systems in New Jersey and Delaware. Middlesex Water Company was incorporated in 1896 and is headquartered in Iselin, New Jersey.

About Pennon Group

Pennon Group Plc provides clean water and wastewater services in the United Kingdom. It provides water and wastewater services for customers in Cornwall, Devon, and parts of Dorset and Somerset; water-only services in the areas of Dorset, Hampshire, and Wiltshire; and water and wastewater retail services to non-household customers in Great Britain. The company also offers regulated water to approximately 1.2 million customers in the Bristol region. Pennon Group Plc was incorporated in 1989 and is based in Exeter, the United Kingdom.