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

Analyst Ratings

This is a summary of recent ratings and recommmendations for Middlesex Water and Global Water Resources, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Middlesex Water 0 1 0 0 2.00
Global Water Resources 0 0 1 0 3.00

Middlesex Water currently has a consensus target price of $39.00, suggesting a potential upside of 3.48%. Global Water Resources has a consensus target price of $11.00, suggesting a potential upside of 18.66%. Given Global Water Resources’ stronger consensus rating and higher probable upside, analysts plainly believe Global Water Resources is more favorable than Middlesex Water.

Institutional and Insider Ownership

49.5% of Middlesex Water shares are owned by institutional investors. Comparatively, 16.2% of Global Water Resources shares are owned by institutional investors. 3.5% of Middlesex 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.

Earnings and Valuation

This table compares Middlesex Water and Global Water Resources’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Middlesex Water $132.75 million 4.64 $52.96 million $1.33 28.34
Global Water Resources $30.33 million 5.99 $12.60 million $0.08 115.89

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

Risk and Volatility

Middlesex Water has a beta of 0.4, meaning that its stock price is 60% less volatile than the S&P 500. Comparatively, Global Water Resources has a beta of 0.31, meaning that its stock price is 69% less volatile than the S&P 500.

Dividends

Middlesex Water pays an annual dividend of $0.85 per share and has a dividend yield of 2.3%. Global Water Resources pays an annual dividend of $0.28 per share and has a dividend yield of 3.0%. Middlesex Water pays out 63.9% of its earnings in the form of a dividend. Global Water Resources pays out 350.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Profitability

This table compares Middlesex Water and Global Water Resources’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Middlesex Water 16.46% 9.95% 3.50%
Global Water Resources 5.05% 10.46% 0.64%

Summary

Middlesex Water beats Global Water Resources on 9 of the 16 factors compared between the two stocks.

About Middlesex Water

Middlesex Water Company is a water utility company. The Company owns and operates regulated water utility and wastewater systems in New Jersey, Delaware and Pennsylvania. The Company also operates water and wastewater systems under contract on behalf of municipal and private clients in New Jersey and Delaware. The Company’s segments include Regulated and Non-Regulated. The Regulated segment is engaged in the business of collecting, treating and distributing water on a retail and wholesale basis to residential, commercial, industrial and fire protection customers in parts of New Jersey, Delaware and Pennsylvania. The Non-Regulated segment primarily consists of non-regulated contract services for the operation and maintenance of municipal and private water and wastewater systems in New Jersey and Delaware. The Middlesex System treats, stores and distributes water for residential, commercial, industrial and fire protection purposes.

About Global Water Resources

Global Water Resources, Inc. is a water resource management company. The Company owns, operates and manages water, wastewater and recycled water utilities in strategically located communities, principally in metropolitan Phoenix, Arizona. The Company focuses on the issues of water supply and scarcity, and applies principles of water conservation through water reclamation and reuse. As of April 28, 2016, the Company owned nine water and wastewater utilities in communities principally in metropolitan Phoenix. As of April 28, 2016, the Company served over 50,000 people in approximately 20,000 homes within its 332 square miles of certificated service areas. The Company is creating renewable water systems where wastewater from homes is treated and used again for various outdoor applications.

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