Aqua America (NYSE: WTR) and AquaVenture (NYSE:WAAS) are both utilities companies, but which is the better business? We will compare the two companies based on the strength of their analyst recommendations, risk, earnings, profitability, dividends, valuation and institutional ownership.

Institutional and Insider Ownership

51.7% of Aqua America shares are owned by institutional investors. Comparatively, 36.8% of AquaVenture shares are owned by institutional investors. 0.3% of Aqua America shares are owned by company insiders. Comparatively, 55.9% of AquaVenture shares are owned by company 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.

Volatility and Risk

Aqua America has a beta of 0.59, indicating that its share price is 41% less volatile than the S&P 500. Comparatively, AquaVenture has a beta of 1.41, indicating that its share price is 41% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings and price targets for Aqua America and AquaVenture, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Aqua America 0 2 3 0 2.60
AquaVenture 0 0 4 1 3.20

Aqua America presently has a consensus price target of $38.25, suggesting a potential upside of 2.27%. AquaVenture has a consensus price target of $22.00, suggesting a potential upside of 42.76%. Given AquaVenture’s stronger consensus rating and higher possible upside, analysts clearly believe AquaVenture is more favorable than Aqua America.

Earnings & Valuation

This table compares Aqua America and AquaVenture’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Aqua America $819.88 million 8.11 $234.18 million $1.33 28.12
AquaVenture $114.10 million 3.57 -$20.47 million ($1.01) -15.26

Aqua America has higher revenue and earnings than AquaVenture. AquaVenture is trading at a lower price-to-earnings ratio than Aqua America, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Aqua America and AquaVenture’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Aqua America 29.38% 12.49% 3.73%
AquaVenture -22.56% -7.38% -5.01%

Dividends

Aqua America pays an annual dividend of $0.82 per share and has a dividend yield of 2.2%. AquaVenture does not pay a dividend. Aqua America pays out 61.7% of its earnings in the form of a dividend. AquaVenture has increased its dividend for 9 consecutive years.

Summary

Aqua America beats AquaVenture on 9 of the 17 factors compared between the two stocks.

About Aqua America

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.

About AquaVenture

AquaVenture Holdings Limited is a multinational provider of Water-as-a-Service solutions. The Company’s segments are Seven Seas Water and Quench. The Seven Seas Water segment provides outsourced desalination solutions and wastewater treatment for governmental, municipal, industrial and hospitality customers. The Quench segment provides bottleless filtered water coolers and other products that use filtered water as an input, such as ice machines, sparkling water dispensers and coffee brewers, to customers throughout the United States typically under multi-year contracts. The Company’s solutions utilize seawater reverse osmosis and other purification technologies to produce potable and industrial process water in high volumes for customers operating in regions with limited access to potable water. As of December 31, 2016, it operated 10 water treatment facilities in the Caribbean region and South America producing approximately eight billion gallons of purified water per year.

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