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

Insider & Institutional Ownership

50.5% of Middlesex Water shares are held by institutional investors. Comparatively, 70.1% of California Water Service Group shares are held by institutional investors. 3.5% of Middlesex Water shares are held by insiders. Comparatively, 1.0% of California Water Service Group shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Dividends

Middlesex Water pays an annual dividend of $0.89 per share and has a dividend yield of 2.2%. California Water Service Group pays an annual dividend of $0.75 per share and has a dividend yield of 1.9%. Middlesex Water pays out 64.5% of its earnings in the form of a dividend. California Water Service Group pays out 53.6% 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. California Water Service Group has raised its dividend for 50 consecutive years.

Risk and Volatility

Middlesex Water has a beta of 0.43, suggesting that its share price is 57% less volatile than the S&P 500. Comparatively, California Water Service Group has a beta of 0.65, suggesting that its share price is 35% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Middlesex Water and California Water Service Group, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Middlesex Water 0 0 1 0 3.00
California Water Service Group 2 5 0 0 1.71

Middlesex Water currently has a consensus price target of $40.00, suggesting a potential downside of 0.74%. California Water Service Group has a consensus price target of $33.75, suggesting a potential downside of 14.66%. Given Middlesex Water’s stronger consensus rating and higher possible upside, analysts plainly believe Middlesex Water is more favorable than California Water Service Group.

Profitability

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

Net Margins Return on Equity Return on Assets
Middlesex Water 17.44% 10.16% 3.54%
California Water Service Group 10.07% 9.97% 2.60%

Earnings & Valuation

This table compares Middlesex Water and California Water Service Group’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Middlesex Water $130.77 million 5.04 $22.80 million $1.38 29.20
California Water Service Group $666.89 million 2.85 $67.18 million $1.40 28.25

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

Summary

Middlesex Water beats California Water Service Group on 10 of the 17 factors compared between the two stocks.

About Middlesex Water

Middlesex Water Company, together with its subsidiaries, owns and operates regulated water utility and wastewater systems. It operates in two segments, Regulated and Non-Regulated. The Regulated segment engages in 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. This segment also includes regulated wastewater systems in New Jersey and Delaware. The Non-Regulated segment provides non-regulated contract services for the operation and maintenance of municipal and private water and wastewater systems in New Jersey and Delaware. Middlesex Water Company was founded in 1897 and is headquartered in Iselin, New Jersey.

About California Water Service Group

California Water Service Group, through its subsidiaries, provides water utility and other related services in California, Washington, New Mexico, and Hawaii. It is involved in the production, purchase, storage, treatment, testing, distribution, and sale of water for domestic, industrial, public, and irrigation uses, as well as for fire protection. The company offers its services to approximately 484,900 customers in 100 California communities; approximately 4,500 water and wastewater customers on the islands of Maui and Hawaii; approximately 16,800 customers in the Tacoma and Olympia areas in Washington; and approximately 8,100 water and wastewater customers in the Belen, Los Lunas, and Elephant Butte areas in New Mexico. It also engages in the provision of non-regulated water-related services, including operating municipally owned water systems, privately owned water, and recycled water distribution systems; providing operational and maintenance, meter reading, and billing services to private companies and municipalities; leasing communication antenna sites on its properties to telecommunication companies; billing optional third-party insurance programs to its residential customers; and providing lab services. California Water Service Group was founded in 1926 and is headquartered in San Jose, California.

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