Consolidated Water Co. (CWCO) and Aqua America (WTR) Critical Analysis
Consolidated Water Co. (NASDAQ: CWCO) and Aqua America (NYSE:WTR) are both utilities companies, but which is the better investment? We will compare the two companies based on the strength of their valuation, profitabiliy, institutional ownership, risk, earnings, dividends and analyst recommendations.
This is a breakdown of recent recommendations and price targets for Consolidated Water Co. and Aqua America, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Consolidated Water Co.||0||0||1||0||3.00|
Consolidated Water Co. currently has a consensus price target of $15.00, suggesting a potential upside of 23.97%. Aqua America has a consensus price target of $31.67, suggesting a potential downside of 5.39%. Given Consolidated Water Co.’s stronger consensus rating and higher probable upside, equities analysts clearly believe Consolidated Water Co. is more favorable than Aqua America.
This table compares Consolidated Water Co. and Aqua America’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Consolidated Water Co.||7.62%||5.34%||5.02%|
Institutional and Insider Ownership
50.8% of Consolidated Water Co. shares are held by institutional investors. Comparatively, 50.3% of Aqua America shares are held by institutional investors. 3.2% of Consolidated Water Co. shares are held by company insiders. Comparatively, 0.3% of Aqua America shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.
Consolidated Water Co. pays an annual dividend of $0.30 per share and has a dividend yield of 2.5%. Aqua America pays an annual dividend of $0.77 per share and has a dividend yield of 2.3%. Consolidated Water Co. pays out 96.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Aqua America pays out 59.2% of its earnings in the form of a dividend. Consolidated Water Co. has raised its dividend for 9 consecutive years. Consolidated Water Co. is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Earnings & Valuation
This table compares Consolidated Water Co. and Aqua America’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Consolidated Water Co.||$59.52 million||3.03||$13.25 million||$0.31||39.03|
|Aqua America||$815.06 million||7.29||$457.59 million||$1.30||25.75|
Aqua America has higher revenue and earnings than Consolidated Water Co.. Aqua America is trading at a lower price-to-earnings ratio than Consolidated Water Co., indicating that it is currently the more affordable of the two stocks.
Risk & Volatility
Consolidated Water Co. has a beta of 0.91, suggesting that its stock price is 9% less volatile than the S&P 500. Comparatively, Aqua America has a beta of 0.56, suggesting that its stock price is 44% less volatile than the S&P 500.
Consolidated Water Co. beats Aqua America on 9 of the 17 factors compared between the two stocks.
About Consolidated Water Co.
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.
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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