Contrasting York Water (NASDAQ:YORW) and Middlesex Water (NASDAQ:MSEX)

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

Institutional & Insider Ownership

79.5% of Middlesex Water shares are owned by institutional investors. Comparatively, 49.9% of York Water shares are owned by institutional investors. 1.9% of Middlesex Water shares are owned by company insiders. Comparatively, 0.5% of York Water shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Risk & Volatility

Middlesex Water has a beta of 0.71, meaning that its share price is 29% less volatile than the S&P 500. Comparatively, York Water has a beta of 0.52, meaning that its share price is 48% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Middlesex Water	24.50%	10.08%	3.69%
York Water	29.07%	9.45%	3.64%

Dividends

Middlesex Water pays an annual dividend of $1.52 per share and has a dividend yield of 2.6%. York Water pays an annual dividend of $0.91 per share and has a dividend yield of 2.9%. Middlesex Water pays out 54.9% of its earnings in the form of a dividend. York Water pays out 54.8% 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 has raised its dividend for 52 consecutive years and York Water has raised its dividend for 27 consecutive years. York Water is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a summary of current ratings for Middlesex Water and York Water, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Middlesex Water	0	3	0	1	2.50
York Water	0	3	0	1	2.50

Middlesex Water currently has a consensus target price of $60.75, indicating a potential upside of 5.84%. York Water has a consensus target price of $32.20, indicating a potential upside of 2.22%. Given Middlesex Water’s higher possible upside, equities research analysts plainly believe Middlesex Water is more favorable than York Water.

Valuation and Earnings

This table compares Middlesex Water and York Water”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Middlesex Water	$212.25 million	5.17	$42.82 million	$2.77	20.72
York Water	$77.49 million	6.60	$20.06 million	$1.66	18.98

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

Summary

Middlesex Water beats York Water on 11 of the 15 factors compared between the two stocks.

About Middlesex Water

Middlesex Water Company is a regulated water utility that provides water and wastewater services. Its operations include sourcing, treating and distributing water, as well as wastewater collection and treatment. Founded in 1897, the company serves customers in New Jersey and Delaware through its regulated utility subsidiaries. Its New Jersey operations focus on central New Jersey, while Tidewater Utilities serves communities in Delaware. Middlesex Water also provides contract operations and maintenance services for municipal and private water and wastewater systems through its subsidiaries.

About York Water

The York Water Company is an investor-owned utility that provides water and wastewater services in south-central Pennsylvania. Its water operations include collecting, treating and distributing water to residential, commercial and industrial customers. The company also provides wastewater collection and treatment services. Its service area is centered in York County and extends into parts of neighboring counties. Founded in 1816, York Water is widely recognized as one of the oldest investor-owned water utilities in the United States.