Global Water Resources (NASDAQ: GWRS) and American Water Works (NYSE:AWK) are both utilities companies, but which is the superior business? We will compare the two businesses based on the strength of their analyst recommendations, earnings, dividends, risk, institutional ownership, profitability and valuation.
Risk and Volatility
Global Water Resources has a beta of 0.34, indicating that its stock price is 66% less volatile than the S&P 500. Comparatively, American Water Works has a beta of 0.25, indicating that its stock price is 75% less volatile than the S&P 500.
Institutional & Insider Ownership
17.0% of Global Water Resources shares are held by institutional investors. Comparatively, 79.9% of American Water Works shares are held by institutional investors. 49.2% of Global Water Resources shares are held by insiders. Comparatively, 0.3% of American Water Works shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.
This table compares Global Water Resources and American Water Works’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Global Water Resources||5.05%||10.46%||0.64%|
|American Water Works||14.20%||9.70%||2.77%|
Global Water Resources pays an annual dividend of $0.28 per share and has a dividend yield of 3.0%. American Water Works pays an annual dividend of $1.66 per share and has a dividend yield of 2.0%. Global Water Resources pays out 350.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. American Water Works pays out 62.6% of its earnings in the form of a dividend. Global Water Resources has increased its dividend for 8 consecutive years. Global Water Resources is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
This is a breakdown of current ratings and price targets for Global Water Resources and American Water Works, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Global Water Resources||0||0||1||0||3.00|
|American Water Works||0||4||3||0||2.43|
Global Water Resources presently has a consensus target price of $11.00, indicating a potential upside of 16.65%. American Water Works has a consensus target price of $81.80, indicating a potential downside of 1.06%. Given Global Water Resources’ stronger consensus rating and higher possible upside, analysts plainly believe Global Water Resources is more favorable than American Water Works.
Earnings and Valuation
This table compares Global Water Resources and American Water Works’ revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Global Water Resources||$30.33 million||6.10||$12.60 million||$0.08||117.89|
|American Water Works||$3.33 billion||4.43||$1.66 billion||$2.65||31.20|
American Water Works has higher revenue and earnings than Global Water Resources. American Water Works is trading at a lower price-to-earnings ratio than Global Water Resources, indicating that it is currently the more affordable of the two stocks.
Global Water Resources beats American Water Works on 9 of the 17 factors compared between the two stocks.
About Global Water Resources
Global Water Resources, Inc. is a water resource management company. The Company owns, operates and manages water, wastewater and recycled water utilities in strategically located communities, principally in metropolitan Phoenix, Arizona. The Company focuses on the issues of water supply and scarcity, and applies principles of water conservation through water reclamation and reuse. As of April 28, 2016, the Company owned nine water and wastewater utilities in communities principally in metropolitan Phoenix. As of April 28, 2016, the Company served over 50,000 people in approximately 20,000 homes within its 332 square miles of certificated service areas. The Company is creating renewable water systems where wastewater from homes is treated and used again for various outdoor applications.
About American Water Works
American Water Works Company, Inc. is a holding company for regulated and market-based subsidiaries throughout the United States and Ontario, Canada. The Company’s Regulated Businesses segment provides water and wastewater services as public utilities in 16 states in the United States as of December 31, 2016. The Market-Based Businesses consists of four segments, including Military Services Group, which conducts operation and maintenance (O&M) of water and wastewater systems for military bases; Contract Operations Group, which conducts O&M of water and wastewater facilities for municipalities and the food and beverage industry; Homeowner Services Group, which primarily provides water and sewer line protection plans for homeowners, and Keystone, which provides water services for natural gas exploration and production companies. The Company, through its subsidiary, American Water Works Service Company, Inc. provides support and operational services for its operating subsidiaries.
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