The York Water (NASDAQ: YORW) and Connecticut Water Service (NASDAQ:CTWS) are both small-cap utilities companies, but which is the better stock? We will contrast the two companies based on the strength of their dividends, analyst recommendations, institutional ownership, risk, valuation, earnings and profitabiliy.

Risk & Volatility

The York Water has a beta of 0.57, suggesting that its stock price is 43% less volatile than the S&P 500. Comparatively, Connecticut Water Service has a beta of 0.09, suggesting that its stock price is 91% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for The York Water and Connecticut Water Service, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
The York Water 0 0 0 0 N/A
Connecticut Water Service 0 1 0 0 2.00

Connecticut Water Service has a consensus price target of $52.00, suggesting a potential downside of 7.64%. Given Connecticut Water Service’s higher probable upside, analysts plainly believe Connecticut Water Service is more favorable than The York Water.

Dividends

The York Water pays an annual dividend of $0.64 per share and has a dividend yield of 1.9%. Connecticut Water Service pays an annual dividend of $1.19 per share and has a dividend yield of 2.1%. The York Water pays out 68.8% of its earnings in the form of a dividend. Connecticut Water Service pays out 55.1% 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 has raised its dividend for 47 consecutive years. Connecticut Water Service is clearly the better dividend stock, given its higher yield and lower payout ratio.

Insider and Institutional Ownership

34.7% of The York Water shares are owned by institutional investors. Comparatively, 45.6% of Connecticut Water Service shares are owned by institutional investors. 1.1% of The York Water shares are owned by company insiders. Comparatively, 2.5% of Connecticut Water Service shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Valuation & Earnings

This table compares The York Water and Connecticut Water Service’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
The York Water $47.60 million 9.24 $29.01 million $0.93 36.83
Connecticut Water Service $99.58 million 6.54 $43.18 million $2.16 26.06

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

Profitability

This table compares The York Water and Connecticut Water Service’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
The York Water 25.05% 10.52% 3.73%
Connecticut Water Service 23.22% 10.13% 3.09%

Summary

Connecticut Water Service beats The York Water on 8 of the 15 factors compared between the two stocks.

The York Water Company Profile

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.

Connecticut Water Service Company Profile

Connecticut Water Service, Inc. is a non-operating holding company. The Company’s income is derived from the earnings of its subsidiary companies, including The Connecticut Water Company (Connecticut Water), The Maine Water Company (Maine Water), New England Water Utility Services, Inc. (NEWUS),The Avon Water Company (AWC) and Chester Realty Company (Chester Realty). It operates through three segments: Water Operations, Real Estate Transactions, and Services and Rentals. The Water Activities segment consists of its regulated water activities to supply public drinking water to customers. The Real Estate Transactions segment involves the sale or donation for income tax benefits of its real estate holdings. Services and Rentals segment provides contracted services to water and wastewater utilities and other clients, and also leases certain of the Company’s properties to third parties through unregulated companies in the State of Connecticut and through Maine Water in the State of Maine.

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