California Water Service Group Holding (NYSE: CWT) and American States Water (NYSE:AWR) are both small-cap utilities companies, but which is the superior business? We will contrast the two companies based on the strength of their risk, dividends, profitabiliy, analyst recommendations, valuation, institutional ownership and earnings.

Analyst Ratings

This is a breakdown of current recommendations and price targets for California Water Service Group Holding and American States Water, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
California Water Service Group Holding 2 4 0 0 1.67
American States Water 1 1 0 0 1.50

California Water Service Group Holding presently has a consensus target price of $32.25, indicating a potential downside of 13.42%. American States Water has a consensus target price of $40.00, indicating a potential downside of 14.97%. Given California Water Service Group Holding’s stronger consensus rating and higher possible upside, equities research analysts plainly believe California Water Service Group Holding is more favorable than American States Water.

Risk and Volatility

California Water Service Group Holding has a beta of 0.68, suggesting that its stock price is 32% less volatile than the S&P 500. Comparatively, American States Water has a beta of 0.46, suggesting that its stock price is 54% less volatile than the S&P 500.

Profitability

This table compares California Water Service Group Holding and American States Water’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
California Water Service Group Holding 8.30% 7.79% 2.11%
American States Water 14.11% 12.72% 4.30%

Dividends

California Water Service Group Holding pays an annual dividend of $0.72 per share and has a dividend yield of 1.9%. American States Water pays an annual dividend of $0.97 per share and has a dividend yield of 2.1%. California Water Service Group Holding pays out 68.6% of its earnings in the form of a dividend. American States Water pays out 57.7% 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. California Water Service Group Holding has raised its dividend for 49 consecutive years and American States Water has raised its dividend for 62 consecutive years. American States Water is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings & Valuation

This table compares California Water Service Group Holding and American States Water’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
California Water Service Group Holding $609.68 million 2.93 $171.02 million $1.05 35.48
American States Water $441.37 million 3.90 $157.11 million $1.68 28.00

California Water Service Group Holding has higher revenue and earnings than American States Water. American States Water is trading at a lower price-to-earnings ratio than California Water Service Group Holding, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

68.5% of California Water Service Group Holding shares are owned by institutional investors. Comparatively, 67.3% of American States Water shares are owned by institutional investors. 1.0% of California Water Service Group Holding shares are owned by insiders. Comparatively, 1.4% of American States Water shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Summary

American States Water beats California Water Service Group Holding on 9 of the 16 factors compared between the two stocks.

About California Water Service Group Holding

California Water Service Group is a holding company. The Company operates through the supply and distribution of water and providing water-related utility services segment. The Company, through its subsidiaries, provides non-regulated services and non-regulated services to private companies and municipalities. The bulk of the business consists of the production, purchase, storage, treatment, testing, distribution and sale of water for domestic, industrial, public and irrigation uses, and for fire protection. It also provides non-regulated water-related services. The non-regulated services include water system operation, billing and meter reading services. Non-regulated operations also include the lease of communication antenna sites, lab services and promotion of other non-regulated services. The Company under its non-regulated contract arrangements, operates municipally owned water systems, privately owned water and recycled water distribution systems.

About American States Water

American States Water Company (AWR) is a holding company. The Company is the parent company of Golden State Water Company (GSWC) and American States Utility Services, Inc. (ASUS), as well as ASUS’ subsidiaries, such as Fort Bliss Water Services Company (FBWS), Terrapin Utility Services, Inc. (TUS), Old Dominion Utility Services, Inc. (ODUS), Palmetto State Utility Services, Inc. (PSUS) and Old North Utility Services, Inc. (ONUS). The Company’s segments include water, electric and contracted services. Within the segments, AWR has two principal business units, water and electric service utility operations, conducted through GSWC, and contracted services conducted through ASUS and its subsidiaries. GSWC is a public utility engaged principally in the purchase, production, distribution and sale of water. As of December 31, 2016, GSWC was engaged in purchase, production, distribution and sale of water in 10 counties in the State of California.

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