Aqua America (NYSE: WTR) and California Water Service Group Holding (NYSE:CWT) are both utilities companies, but which is the superior investment? We will contrast the two businesses based on the strength of their earnings, institutional ownership, profitabiliy, valuation, dividends, analyst recommendations and risk.

Profitability

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

Net Margins Return on Equity Return on Assets
Aqua America 28.41% 12.62% 3.80%
California Water Service Group Holding 8.30% 7.79% 2.11%

Earnings & Valuation

This table compares Aqua America and California Water Service Group Holding’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Aqua America $815.06 million 7.48 $457.59 million $1.30 26.42
California Water Service Group Holding $609.68 million 2.95 $171.02 million $1.05 35.67

Aqua America has higher revenue and earnings than California Water Service Group Holding. Aqua America 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

50.3% of Aqua America shares are owned by institutional investors. Comparatively, 69.1% of California Water Service Group Holding shares are owned by institutional investors. 0.3% of Aqua America shares are owned by insiders. Comparatively, 1.0% of California Water Service Group Holding shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Risk and Volatility

Aqua America has a beta of 0.56, indicating that its stock price is 44% less volatile than the S&P 500. Comparatively, California Water Service Group Holding has a beta of 0.7, indicating that its stock price is 30% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current recommendations for Aqua America and California Water Service Group Holding, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Aqua America 1 2 2 0 2.20
California Water Service Group Holding 2 4 0 0 1.67

Aqua America presently has a consensus target price of $31.67, suggesting a potential downside of 7.81%. California Water Service Group Holding has a consensus target price of $32.25, suggesting a potential downside of 13.89%. Given Aqua America’s stronger consensus rating and higher probable upside, analysts clearly believe Aqua America is more favorable than California Water Service Group Holding.

Dividends

Aqua America pays an annual dividend of $0.77 per share and has a dividend yield of 2.2%. California Water Service Group Holding pays an annual dividend of $0.72 per share and has a dividend yield of 1.9%. Aqua America pays out 59.2% of its earnings in the form of a dividend. California Water Service Group Holding pays out 68.6% 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. Aqua America has increased its dividend for 9 consecutive years and California Water Service Group Holding has increased its dividend for 49 consecutive years. Aqua America is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Aqua America beats California Water Service Group Holding on 12 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 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.

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