Aqua America (NYSE: WTR) and The York Water Company (NASDAQ:YORW) are both utilities companies, but which is the superior investment? We will contrast the two companies based on the strength of their risk, analyst recommendations, profitabiliy, valuation, dividends, institutional ownership and earnings.

Institutional and Insider Ownership

50.3% of Aqua America shares are held by institutional investors. Comparatively, 34.8% of The York Water Company shares are held by institutional investors. 0.3% of Aqua America shares are held by insiders. Comparatively, 1.1% of The York Water Company shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of current recommendations for Aqua America and The York Water Company, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Aqua America 1 2 2 0 2.20
The York Water Company 0 0 0 0 N/A

Aqua America currently has a consensus target price of $31.67, suggesting a potential downside of 5.39%. Given Aqua America’s higher possible upside, research analysts clearly believe Aqua America is more favorable than The York Water Company.

Volatility & Risk

Aqua America has a beta of 0.56, suggesting that its share price is 44% less volatile than the S&P 500. Comparatively, The York Water Company has a beta of 0.59, suggesting that its share price is 41% less volatile than the S&P 500.

Dividends

Aqua America pays an annual dividend of $0.77 per share and has a dividend yield of 2.3%. The York Water Company pays an annual dividend of $0.64 per share and has a dividend yield of 1.8%. Aqua America pays out 59.2% of its earnings in the form of a dividend. The York Water Company pays out 68.8% 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. The York Water Company has increased its dividend for 9 consecutive years. Aqua America is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

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

Net Margins Return on Equity Return on Assets
Aqua America 28.41% 12.62% 3.80%
The York Water Company 25.09% 10.52% 3.75%

Earnings & Valuation

This table compares Aqua America and The York Water Company’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Aqua America $815.06 million 7.29 $457.59 million $1.30 25.75
The York Water Company $47.60 million 9.78 $29.01 million $0.93 38.98

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

Summary

Aqua America beats The York Water Company on 11 of the 16 factors compared between the two stocks.

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.

About The York Water Company

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.

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