Consolidated Water (NASDAQ: CWCO) and Companhia de Saneamento Basico (NYSE:SBS) are both utilities companies, but which is the better business? We will contrast the two businesses based on the strength of their dividends, earnings, institutional ownership, analyst recommendations, valuation, profitability and risk.

Valuation & Earnings

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This table compares Consolidated Water and Companhia de Saneamento Basico’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Consolidated Water $57.88 million 3.73 $3.96 million $0.41 35.37
Companhia de Saneamento Basico $4.07 billion 1.94 $844.93 million $1.30 8.88

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

Analyst Ratings

This is a breakdown of recent ratings and price targets for Consolidated Water and Companhia de Saneamento Basico, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Consolidated Water 0 0 1 0 3.00
Companhia de Saneamento Basico 1 2 2 0 2.20

Consolidated Water currently has a consensus price target of $15.00, indicating a potential upside of 3.45%. Given Consolidated Water’s stronger consensus rating and higher possible upside, equities research analysts clearly believe Consolidated Water is more favorable than Companhia de Saneamento Basico.

Institutional & Insider Ownership

51.9% of Consolidated Water shares are held by institutional investors. Comparatively, 16.2% of Companhia de Saneamento Basico shares are held by institutional investors. 3.2% of Consolidated Water shares are held by company insiders. Comparatively, 1.0% of Companhia de Saneamento Basico shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Profitability

This table compares Consolidated Water and Companhia de Saneamento Basico’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Consolidated Water 9.72% 5.28% 4.95%
Companhia de Saneamento Basico 19.70% 17.82% 7.79%

Dividends

Consolidated Water pays an annual dividend of $0.34 per share and has a dividend yield of 2.3%. Companhia de Saneamento Basico pays an annual dividend of $0.29 per share and has a dividend yield of 2.5%. Consolidated Water pays out 82.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Companhia de Saneamento Basico pays out 22.3% of its earnings in the form of a dividend. Companhia de Saneamento Basico is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility and Risk

Consolidated Water has a beta of 0.79, suggesting that its share price is 21% less volatile than the S&P 500. Comparatively, Companhia de Saneamento Basico has a beta of 1.74, suggesting that its share price is 74% more volatile than the S&P 500.

Summary

Companhia de Saneamento Basico beats Consolidated Water on 10 of the 16 factors compared between the two stocks.

Consolidated Water 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.

Companhia de Saneamento Basico Company Profile

Companhia de Saneamento Basico do Estado de Sao Paulo-SABESP is a water and sewage service provider. The Company provides water and sewage services to a range of residential, commercial, industrial and governmental customers in over 360 municipalities in the state of Sao Paulo, including the city of Sao Paulo. The Company’s segments include Water and Sewage. The Company also supplies treated water on a wholesale basis to approximately 10 municipalities located in the Sao Paulo metropolitan region and urban conurbations. The Company’s activities comprise water supply, sanitary sewage services, urban rainwater management and drainage services, urban cleaning services, solid waste management services and related activities, including the planning, operation, maintenance and commercialization of energy, and the commercialization of services, products, benefits and rights that directly or indirectly arise from its assets, operations and activities.

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