Contrasting American Water Works (NYSE:AWK) and Middlesex Water (NASDAQ:MSEX)

Middlesex Water (NASDAQ:MSEX) and American Water Works (NYSE:AWK) are both utilities companies, but which is the superior stock? We will contrast the two businesses based on the strength of their analyst recommendations, institutional ownership, earnings, risk, profitability, valuation and dividends.

Profitability

This table compares Middlesex Water and American Water Works’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Middlesex Water	24.50%	10.08%	3.69%
American Water Works	21.26%	10.14%	3.19%

Analyst Ratings

This is a summary of recent recommendations and price targets for Middlesex Water and American Water Works, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Middlesex Water	0	3	0	1	2.50
American Water Works	1	7	2	0	2.10

Middlesex Water presently has a consensus target price of $60.75, suggesting a potential upside of 4.94%. American Water Works has a consensus target price of $144.12, suggesting a potential downside of 2.89%. Given Middlesex Water’s stronger consensus rating and higher possible upside, equities research analysts plainly believe Middlesex Water is more favorable than American Water Works.

Dividends

Middlesex Water pays an annual dividend of $1.52 per share and has a dividend yield of 2.6%. American Water Works pays an annual dividend of $3.58 per share and has a dividend yield of 2.4%. Middlesex Water pays out 54.9% of its earnings in the form of a dividend. American Water Works pays out 62.0% 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. Middlesex Water has increased its dividend for 52 consecutive years and American Water Works has increased its dividend for 18 consecutive years. Middlesex Water is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility & Risk

Middlesex Water has a beta of 0.71, indicating that its stock price is 29% less volatile than the S&P 500. Comparatively, American Water Works has a beta of 0.56, indicating that its stock price is 44% less volatile than the S&P 500.

Earnings & Valuation

This table compares Middlesex Water and American Water Works”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Middlesex Water	$212.25 million	5.22	$42.82 million	$2.77	20.90
American Water Works	$5.14 billion	5.75	$1.11 billion	$5.77	25.72

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

Insider & Institutional Ownership

79.5% of Middlesex Water shares are owned by institutional investors. Comparatively, 86.6% of American Water Works shares are owned by institutional investors. 1.9% of Middlesex Water shares are owned by company insiders. Comparatively, 0.1% of American Water Works shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Summary

Middlesex Water beats American Water Works on 10 of the 18 factors compared between the two stocks.

About Middlesex Water

Middlesex Water Company is a regulated water utility that provides water and wastewater services. Its operations include sourcing, treating and distributing water, as well as wastewater collection and treatment. Founded in 1897, the company serves customers in New Jersey and Delaware through its regulated utility subsidiaries. Its New Jersey operations focus on central New Jersey, while Tidewater Utilities serves communities in Delaware. Middlesex Water also provides contract operations and maintenance services for municipal and private water and wastewater systems through its subsidiaries.

About American Water Works

American Water Works Company, Inc. is a U.S. water and wastewater utility that provides services to residential, commercial, industrial, and public-sector customers. Its operations include treating and distributing drinking water, collecting and treating wastewater, and maintaining the infrastructure needed to deliver those services. The company operates regulated water and wastewater utilities across multiple states, serving communities in regions including the Northeast, Midwest, and South. Through contracted operations, it also provides water and wastewater services to certain military installations and municipal customers.