Middlesex Water (NASDAQ: MSEX) and SJW Corporation (NYSE:SJW) are both small-cap utilities companies, but which is the better business? We will contrast the two businesses based on the strength of their valuation, analyst recommendations, dividends, earnings, institutional ownership, risk and profitabiliy.

Insider and Institutional Ownership

49.1% of Middlesex Water shares are held by institutional investors. Comparatively, 48.1% of SJW Corporation shares are held by institutional investors. 3.5% of Middlesex Water shares are held by company insiders. Comparatively, 21.1% of SJW Corporation shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Analyst Ratings

This is a breakdown of current ratings for Middlesex Water and SJW Corporation, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Middlesex Water 0 1 0 0 2.00
SJW Corporation 0 0 1 0 3.00

Middlesex Water currently has a consensus price target of $39.00, suggesting a potential downside of 0.99%. Given Middlesex Water’s higher possible upside, equities research analysts clearly believe Middlesex Water is more favorable than SJW Corporation.

Volatility and Risk

Middlesex Water has a beta of 0.4, suggesting that its stock price is 60% less volatile than the S&P 500. Comparatively, SJW Corporation has a beta of 0.18, suggesting that its stock price is 82% less volatile than the S&P 500.

Dividends

Middlesex Water pays an annual dividend of $0.85 per share and has a dividend yield of 2.2%. SJW Corporation pays an annual dividend of $0.87 per share and has a dividend yield of 1.6%. Middlesex Water pays out 63.9% of its earnings in the form of a dividend. SJW Corporation pays out 32.6% 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. SJW Corporation has increased its dividend for 49 consecutive years.

Earnings & Valuation

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

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Middlesex Water $132.75 million 4.85 $52.96 million $1.33 29.62
SJW Corporation $362.77 million 3.15 $142.70 million $2.67 20.85

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

Profitability

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

Net Margins Return on Equity Return on Assets
Middlesex Water 16.46% 9.95% 3.50%
SJW Corporation 15.17% 11.96% 3.48%

Summary

SJW Corporation beats Middlesex Water on 9 of the 17 factors compared between the two stocks.

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.

About SJW Corporation

SJW Group, formerly SJW Corp., is a holding company. The Company’s subsidiaries include San Jose Water Company, SJWTX, Inc., SJW Land Company and Texas Water Alliance Limited (TWA). SJWTX, Inc. is doing business as Canyon Lake Water Service Company (CLWSC). It operates through the segments, which include Water Utility Services, Real Estate Services and All Other. Its Water Utility Services segment provides water utility and utility-related services to its customers through its subsidiaries, such as San Jose Water Company, CLWSC and TWA. The Real Estate Services segment includes property management and investment activity conducted by SJW Land Company. The Company’s All Other segment includes its other business activities. San Jose Water Company distributes water to customers in accordance with accepted water utility methods. SJW Land Company owns undeveloped land, and owns and operates a portfolio of commercial buildings in the states of California, Texas, Arizona and Tennessee.

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