American Water Works (AWK) and Artesian Resources Corporation (ARTNA) Financial Analysis

American Water Works (NYSE: AWK) and Artesian Resources Corporation (NASDAQ:ARTNA) are both utilities companies, but which is the better stock? We will compare the two businesses based on the strength of their institutional ownership, risk, valuation, earnings, analyst recommendations, profitabiliy and dividends.

Profitability

This table compares American Water Works and Artesian Resources Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
American Water Works 14.45% 9.92% 2.85%
Artesian Resources Corporation 16.55% 9.59% 2.94%

Volatility & Risk

American Water Works has a beta of 0.23, meaning that its stock price is 77% less volatile than the S&P 500. Comparatively, Artesian Resources Corporation has a beta of 0.19, meaning that its stock price is 81% less volatile than the S&P 500.

Dividends

American Water Works pays an annual dividend of $1.66 per share and has a dividend yield of 2.0%. Artesian Resources Corporation pays an annual dividend of $0.93 per share and has a dividend yield of 2.3%. American Water Works pays out 61.7% of its earnings in the form of a dividend. Artesian Resources Corporation pays out 64.1% 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. Artesian Resources Corporation has increased its dividend for 8 consecutive years. Artesian Resources Corporation is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a summary of current ratings and target prices for American Water Works and Artesian Resources Corporation, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
American Water Works 0 4 5 0 2.56
Artesian Resources Corporation 0 1 0 0 2.00

American Water Works currently has a consensus price target of $82.57, indicating a potential upside of 1.53%. Artesian Resources Corporation has a consensus price target of $41.00, indicating a potential upside of 2.42%. Given Artesian Resources Corporation’s higher probable upside, analysts clearly believe Artesian Resources Corporation is more favorable than American Water Works.

Valuation and Earnings

This table compares American Water Works and Artesian Resources Corporation’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
American Water Works $3.32 billion 4.37 $1.64 billion $2.69 30.23
Artesian Resources Corporation $79.83 million 4.59 $36.62 million $1.45 27.61

American Water Works has higher revenue and earnings than Artesian Resources Corporation. Artesian Resources Corporation 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.

Institutional and Insider Ownership

81.8% of American Water Works shares are owned by institutional investors. Comparatively, 39.8% of Artesian Resources Corporation shares are owned by institutional investors. 0.3% of American Water Works shares are owned by insiders. Comparatively, 20.6% of Artesian Resources Corporation shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Summary

American Water Works beats Artesian Resources Corporation on 9 of the 17 factors compared between the two stocks.

American Water Works Company Profile

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.

Artesian Resources Corporation Company Profile

Artesian Resources Corporation is a holding company. The Company’s subsidiaries offer water, wastewater and other services on the Delmarva Peninsula. The Company distributes and sells water, including water for public and private fire protection, to residential, commercial, industrial, municipal and utility customers in the states of Delaware, Maryland and Pennsylvania. The Company also provides wastewater services to customers in Delaware. In addition, the Company provides contract water and wastewater operations, and water, sewer and internal Service Line Protection Plans. As of December 31, 2016, the Company was the holding company of five regulated public utilities: Artesian Water Company, Inc., Artesian Water Pennsylvania, Inc., Artesian Water Maryland, Inc., Artesian Wastewater Management, Inc. and Artesian Wastewater Maryland, Inc., and three non-regulated subsidiaries: Artesian Utility Development, Inc., Artesian Development Corporation and Artesian Consulting Engineers, Inc.

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