Connecticut Water Service (NASDAQ: CTWS) and Middlesex Water (NASDAQ:MSEX) are both small-cap utilities companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, risk, dividends, institutional ownership, earnings, valuation and analyst recommendations.

Valuation & Earnings

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

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Connecticut Water Service $101.43 million 7.04 $44.36 million $2.00 30.86
Middlesex Water $132.75 million 5.20 $52.96 million $1.33 31.75

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

Insider and Institutional Ownership

46.8% of Connecticut Water Service shares are held by institutional investors. Comparatively, 49.1% of Middlesex Water shares are held by institutional investors. 2.5% of Connecticut Water Service shares are held by company insiders. Comparatively, 3.5% of Middlesex Water shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of current ratings for Connecticut Water Service and Middlesex Water, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Connecticut Water Service 0 1 0 0 2.00
Middlesex Water 0 0 1 0 3.00

Connecticut Water Service currently has a consensus target price of $57.00, indicating a potential downside of 7.63%. Middlesex Water has a consensus target price of $44.00, indicating a potential upside of 4.19%. Given Middlesex Water’s stronger consensus rating and higher probable upside, analysts plainly believe Middlesex Water is more favorable than Connecticut Water Service.

Volatility & Risk

Connecticut Water Service has a beta of 0.11, indicating that its stock price is 89% less volatile than the S&P 500. Comparatively, Middlesex Water has a beta of 0.41, indicating that its stock price is 59% less volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
Connecticut Water Service 21.37% 9.21% 2.80%
Middlesex Water 16.46% 9.95% 3.50%

Dividends

Connecticut Water Service pays an annual dividend of $1.19 per share and has a dividend yield of 1.9%. Middlesex Water pays an annual dividend of $0.85 per share and has a dividend yield of 2.0%. Connecticut Water Service pays out 59.5% of its earnings in the form of a dividend. Middlesex Water pays out 63.9% 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. Connecticut Water Service has raised its dividend for 47 consecutive years.

Summary

Middlesex Water beats Connecticut Water Service on 12 of the 17 factors compared between the two stocks.

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.

Middlesex Water Company Profile

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.

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