AquaVenture (NYSE: WAAS) and Aqua America (NYSE:WTR) are both utilities companies, but which is the superior business? We will contrast the two businesses based on the strength of their valuation, profitability, institutional ownership, earnings, dividends, risk and analyst recommendations.

Dividends

Aqua America pays an annual dividend of $0.82 per share and has a dividend yield of 2.2%. AquaVenture does not pay a dividend. Aqua America pays out 61.7% of its earnings in the form of a dividend. Aqua America has increased its dividend for 9 consecutive years.

Insider and Institutional Ownership

36.8% of AquaVenture shares are owned by institutional investors. Comparatively, 51.7% of Aqua America shares are owned by institutional investors. 55.9% of AquaVenture shares are owned by company insiders. Comparatively, 0.3% of Aqua America shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares AquaVenture and Aqua America’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
AquaVenture -22.56% -7.38% -5.01%
Aqua America 29.38% 12.49% 3.73%

Valuation & Earnings

This table compares AquaVenture and Aqua America’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
AquaVenture $114.10 million 3.58 -$20.47 million ($1.01) -15.31
Aqua America $819.88 million 8.15 $234.18 million $1.33 28.26

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

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for AquaVenture and Aqua America, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
AquaVenture 0 0 4 1 3.20
Aqua America 0 2 4 0 2.67

AquaVenture currently has a consensus price target of $22.00, indicating a potential upside of 42.30%. Aqua America has a consensus price target of $38.80, indicating a potential upside of 3.22%. Given AquaVenture’s stronger consensus rating and higher probable upside, analysts plainly believe AquaVenture is more favorable than Aqua America.

Risk & Volatility

AquaVenture has a beta of 1.41, meaning that its stock price is 41% more volatile than the S&P 500. Comparatively, Aqua America has a beta of 0.59, meaning that its stock price is 41% less volatile than the S&P 500.

Summary

Aqua America beats AquaVenture on 10 of the 16 factors compared between the two stocks.

About AquaVenture

AquaVenture Holdings Limited is a multinational provider of Water-as-a-Service solutions. The Company’s segments are Seven Seas Water and Quench. The Seven Seas Water segment provides outsourced desalination solutions and wastewater treatment for governmental, municipal, industrial and hospitality customers. The Quench segment provides bottleless filtered water coolers and other products that use filtered water as an input, such as ice machines, sparkling water dispensers and coffee brewers, to customers throughout the United States typically under multi-year contracts. The Company’s solutions utilize seawater reverse osmosis and other purification technologies to produce potable and industrial process water in high volumes for customers operating in regions with limited access to potable water. As of December 31, 2016, it operated 10 water treatment facilities in the Caribbean region and South America producing approximately eight billion gallons of purified water per year.

About Aqua America

Aqua America, Inc. is a holding company. The Company is engaged in providing water or wastewater services concentrated in Pennsylvania, Ohio, Texas, Illinois, North Carolina, New Jersey, Indiana and Virginia. The Company is the holding company for its primary subsidiary, Aqua Pennsylvania, Inc. Its market-based activities are conducted through Aqua Resources, Inc. (Aqua Resources) and Aqua Infrastructure, LLC (Aqua Infrastructure). Aqua Resources, Inc. provides water and wastewater service through operating and maintenance contracts with municipal authorities and other parties close to its utility companies’ service territories, and offers, through a third party, water and sewer line repair service and protection solutions to households. Aqua Infrastructure provides non-utility raw water supply services for firms in the natural gas drilling industry. The Company owns several wastewater collection systems that convey the wastewater to a municipally-owned facility for treatment.

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