Comparing Essential Utilities (NYSE:WTRG) & Consolidated Water (NASDAQ:CWCO)

Essential Utilities (NYSE:WTRG) and Consolidated Water (NASDAQ:CWCO) are both utilities companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, risk, institutional ownership, earnings, dividends, analyst recommendations and valuation.

Earnings & Valuation

This table compares Essential Utilities and Consolidated Water’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Essential Utilities $889.69 million 12.06 $224.54 million $1.47 29.75
Consolidated Water $68.79 million 2.45 $12.18 million $0.56 19.89

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

Dividends

Essential Utilities pays an annual dividend of $1.00 per share and has a dividend yield of 2.3%. Consolidated Water pays an annual dividend of $0.34 per share and has a dividend yield of 3.1%. Essential Utilities pays out 68.0% of its earnings in the form of a dividend. Consolidated Water pays out 60.7% 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. Essential Utilities has increased its dividend for 1 consecutive years and Consolidated Water has increased its dividend for 1 consecutive years. Consolidated Water is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility and Risk

Essential Utilities has a beta of 0.47, meaning that its share price is 53% less volatile than the S&P 500. Comparatively, Consolidated Water has a beta of 0.22, meaning that its share price is 78% less volatile than the S&P 500.

Institutional and Insider Ownership

65.7% of Essential Utilities shares are held by institutional investors. Comparatively, 44.8% of Consolidated Water shares are held by institutional investors. 0.2% of Essential Utilities shares are held by insiders. Comparatively, 5.1% of Consolidated Water shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Profitability

This table compares Essential Utilities and Consolidated Water’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Essential Utilities 25.15% 8.83% 3.36%
Consolidated Water 7.20% 5.02% 4.68%

Analyst Ratings

This is a summary of current recommendations and price targets for Essential Utilities and Consolidated Water, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Essential Utilities 0 1 0 0 2.00
Consolidated Water 0 1 0 0 2.00

Essential Utilities currently has a consensus target price of $50.00, suggesting a potential upside of 14.34%. Consolidated Water has a consensus target price of $14.00, suggesting a potential upside of 25.67%. Given Consolidated Water’s higher possible upside, analysts clearly believe Consolidated Water is more favorable than Essential Utilities.

Summary

Essential Utilities beats Consolidated Water on 9 of the 14 factors compared between the two stocks.

About Essential Utilities

Essential Utilities, Inc., through its subsidiaries, operates regulated utilities that provide water or wastewater services in the United States. It offers water services through operating and maintenance contracts with municipal authorities and other parties. The company also provides non-utility raw water supply services for firms in the natural gas drilling industry; and water and sewer line protection solutions, and repair services to households through a third-party. It serves approximately 3 million residential water, commercial water, fire protection, industrial water, wastewater, and other water and utility customers in Pennsylvania, Ohio, Texas, Illinois, North Carolina, New Jersey, Indiana, and Virginia. The company was formerly known as Aqua America, Inc. and changed its name to Essential Utilities, Inc. in February 2020. Essential Utilities, Inc. was founded in 1886 and is headquartered in Bryn Mawr, Pennsylvania.

About Consolidated Water

Consolidated Water Co. Ltd., together with its subsidiaries, designs, constructs, manages, and operates water production and treatment plants primarily in the Cayman Islands, the Bahamas, Indonesia, and the United States. The company operates through four segments: Retail, Bulk, Services, and Manufacturing. It uses reverse osmosis technology to produce potable water from seawater. The company produces and supplies water to end-users, including residential, commercial, and government customers, as well as government-owned distributors. It also provides design, engineering, construction, procurement, and management services for desalination projects and plants. In addition, the company manufactures and services a range of water-related products, including reverse osmosis desalination equipment, membrane separation equipment, filtration equipment, piping systems, vessels, and custom fabricated components; and provides design, engineering, consulting, management, inspection, training, and equipment maintenance services for commercial, municipal, and industrial water production, supply, and treatment, as well as wastewater treatment. Consolidated Water Co. Ltd. was founded in 1973 and is headquartered in Grand Cayman, the Cayman Islands.

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