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

Analyst Recommendations

This is a breakdown of recent ratings and price targets for The York Water and Middlesex Water, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
The York Water 0 0 0 0 N/A
Middlesex Water 0 1 0 0 2.00

Middlesex Water has a consensus target price of $39.00, indicating a potential downside of 3.66%. Given Middlesex Water’s higher possible upside, analysts clearly believe Middlesex Water is more favorable than The York Water.

Profitability

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

Net Margins Return on Equity Return on Assets
The York Water 25.05% 10.52% 3.73%
Middlesex Water 16.46% 9.95% 3.50%

Dividends

The York Water pays an annual dividend of $0.64 per share and has a dividend yield of 1.8%. Middlesex Water pays an annual dividend of $0.85 per share and has a dividend yield of 2.1%. The York Water pays out 68.8% of its earnings in the form of a dividend. Middlesex Water pays out 63.9% 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 is clearly the better dividend stock, given its higher yield and lower payout ratio.

Insider and Institutional Ownership

35.4% of The York Water shares are held by institutional investors. Comparatively, 49.1% of Middlesex Water shares are held by institutional investors. 1.1% of The York Water shares are held by company insiders. Comparatively, 3.5% of Middlesex Water shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Earnings & Valuation

This table compares The York Water and Middlesex Water’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
The York Water $48.03 million 9.38 $28.97 million $0.93 37.69
Middlesex Water $132.75 million 4.98 $52.96 million $1.33 30.44

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

Volatility & Risk

The York Water has a beta of 0.58, meaning that its share price is 42% less volatile than the S&P 500. Comparatively, Middlesex Water has a beta of 0.41, meaning that its share price is 59% less volatile than the S&P 500.

Summary

Middlesex Water beats The York Water on 8 of the 14 factors compared between the two stocks.

About The York Water

The York Water Company is an investor-owned water utility in the United States. The primary business of the Company is to impound, purify to meet or exceed safe drinking water standards and distribute water. As of December 31, 2016, it also owned and operated three wastewater collection systems and two wastewater treatment systems. As of December 31, 2016, it operated within its territory, which covered 39 municipalities within York County, Pennsylvania and nine municipalities within Adams County, Pennsylvania. Its two wastewater treatment facilities are located in East Manchester and Lower Windsor Townships. It provides sewer billing services. It has a service line protection program, which allows customers to pay a fixed monthly fee, and it will repair or replace damaged customer service lines. As of December 31, 2016, it obtained the bulk of its water supply from both the South Branch and East Branch of the Codorus Creek, which together had a daily flow of 73 million gallons.

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.

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