Aqua America (NYSE: WTR) and Companhia de saneamento Basico Do Estado De Sao Paulo – Sabesp (NYSE:SBS) are both mid-cap utilities companies, but which is the better stock? We will contrast the two companies based on the strength of their valuation, analyst recommendations, profitabiliy, dividends, institutional ownership, risk and earnings.

Valuation and Earnings

This table compares Aqua America and Companhia de saneamento Basico Do Estado De Sao Paulo – Sabesp’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Aqua America $815.06 million 7.11 $457.59 million $1.30 25.09
Companhia de saneamento Basico Do Estado De Sao Paulo – Sabesp $4.38 billion 1.49 $1.49 billion $1.32 7.26

Companhia de saneamento Basico Do Estado De Sao Paulo – Sabesp has higher revenue and earnings than Aqua America. Companhia de saneamento Basico Do Estado De Sao Paulo – Sabesp is trading at a lower price-to-earnings ratio than Aqua America, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Aqua America has a beta of 0.53, meaning that its share price is 47% less volatile than the S&P 500. Comparatively, Companhia de saneamento Basico Do Estado De Sao Paulo – Sabesp has a beta of 1.75, meaning that its share price is 75% more volatile than the S&P 500.

Institutional and Insider Ownership

50.4% of Aqua America shares are owned by institutional investors. Comparatively, 14.9% of Companhia de saneamento Basico Do Estado De Sao Paulo – Sabesp shares are owned by institutional investors. 0.3% of Aqua America shares are owned by company insiders. Comparatively, 1.0% of Companhia de saneamento Basico Do Estado De Sao Paulo – Sabesp 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.

Dividends

Aqua America pays an annual dividend of $0.77 per share and has a dividend yield of 2.4%. Companhia de saneamento Basico Do Estado De Sao Paulo – Sabesp pays an annual dividend of $0.29 per share and has a dividend yield of 3.0%. Aqua America pays out 59.2% of its earnings in the form of a dividend. Companhia de saneamento Basico Do Estado De Sao Paulo – Sabesp pays out 22.0% 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. Aqua America has increased its dividend for 9 consecutive years. Companhia de saneamento Basico Do Estado De Sao Paulo – Sabesp is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Aqua America and Companhia de saneamento Basico Do Estado De Sao Paulo – Sabesp’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%
Companhia de saneamento Basico Do Estado De Sao Paulo – Sabesp 20.38% 20.09% 8.70%

Analyst Ratings

This is a summary of current ratings and recommmendations for Aqua America and Companhia de saneamento Basico Do Estado De Sao Paulo – Sabesp, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Aqua America 1 2 2 0 2.20
Companhia de saneamento Basico Do Estado De Sao Paulo – Sabesp 1 4 0 0 1.80

Aqua America presently has a consensus target price of $31.67, suggesting a potential downside of 2.92%. Given Aqua America’s stronger consensus rating and higher probable upside, equities research analysts plainly believe Aqua America is more favorable than Companhia de saneamento Basico Do Estado De Sao Paulo – Sabesp.

Summary

Companhia de saneamento Basico Do Estado De Sao Paulo – Sabesp beats Aqua America on 9 of the 17 factors compared between the two stocks.

Aqua America Company Profile

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.

Companhia de saneamento Basico Do Estado De Sao Paulo – Sabesp Company Profile

Companhia de Saneamento Basico do Estado de Sao Paulo-SABESP is a water and sewage service provider. The Company provides water and sewage services to a range of residential, commercial, industrial and governmental customers in over 360 municipalities in the state of Sao Paulo, including the city of Sao Paulo. The Company’s segments include Water and Sewage. The Company also supplies treated water on a wholesale basis to approximately 10 municipalities located in the Sao Paulo metropolitan region and urban conurbations. The Company’s activities comprise water supply, sanitary sewage services, urban rainwater management and drainage services, urban cleaning services, solid waste management services and related activities, including the planning, operation, maintenance and commercialization of energy, and the commercialization of services, products, benefits and rights that directly or indirectly arise from its assets, operations and activities.

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