Essential Utilities (NYSE:WTRG – Get Free Report) and H2O America (NASDAQ:HTO – Get Free Report) are both utilities companies, but which is the better business? We will compare the two businesses based on the strength of their dividends, earnings, valuation, analyst recommendations, profitability, institutional ownership and risk.
Risk and Volatility
Essential Utilities has a beta of 0.63, suggesting that its stock price is 37% less volatile than the S&P 500. Comparatively, H2O America has a beta of 0.33, suggesting that its stock price is 67% less volatile than the S&P 500.
Institutional & Insider Ownership
74.8% of Essential Utilities shares are owned by institutional investors. Comparatively, 84.3% of H2O America shares are owned by institutional investors. 0.4% of Essential Utilities shares are owned by company insiders. Comparatively, 0.5% of H2O America shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.
Earnings and Valuation
This table compares Essential Utilities and H2O America”s revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Essential Utilities | $2.47 billion | 5.06 | $616.37 million | $1.96 | 22.50 |
| H2O America | $800.59 million | 3.66 | $102.58 million | $2.55 | 23.77 |
Essential Utilities has higher revenue and earnings than H2O America. Essential Utilities is trading at a lower price-to-earnings ratio than H2O America, indicating that it is currently the more affordable of the two stocks.
Analyst Ratings
This is a breakdown of current ratings and price targets for Essential Utilities and H2O America, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Essential Utilities | 1 | 0 | 3 | 1 | 2.80 |
| H2O America | 0 | 3 | 6 | 2 | 2.91 |
Essential Utilities currently has a consensus target price of $43.00, indicating a potential downside of 2.48%. H2O America has a consensus target price of $64.86, indicating a potential upside of 7.00%. Given H2O America’s stronger consensus rating and higher probable upside, analysts clearly believe H2O America is more favorable than Essential Utilities.
Profitability
This table compares Essential Utilities and H2O America’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Essential Utilities | 21.60% | 8.23% | 2.91% |
| H2O America | 12.51% | 6.03% | 2.03% |
Dividends
Essential Utilities pays an annual dividend of $1.44 per share and has a dividend yield of 3.3%. H2O America pays an annual dividend of $1.76 per share and has a dividend yield of 2.9%. Essential Utilities pays out 73.5% of its earnings in the form of a dividend. H2O America pays out 69.0% 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. Essential Utilities has raised its dividend for 32 consecutive years and H2O America has raised its dividend for 57 consecutive years.
Summary
H2O America beats Essential Utilities on 10 of the 18 factors compared between the two stocks.
About Essential Utilities
Essential Utilities, Inc., through its subsidiaries, operates regulated utilities that provide water, wastewater, or natural gas services in the United States. The company operates through Regulated Water and Regulated Natural Gas segments. It offers water services through operating and maintenance contract with municipal authorities and other parties. In addition, the company provides utility service line protection solutions and repair services to households. It serves approximately 5.5 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, Virginia, and Kentucky under the Aqua and Peoples brands. 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 H2O America
SJW Group, through its subsidiaries, provides water utility and other related services in the United States. It operates in Water Utility Services and Real Estate Services segments. The company engages in the production, purchase, storage, purification, distribution, wholesale, and retail sale of water and wastewater services; and supplies groundwater from wells, surface water from watershed run-off and diversion, reclaimed water, and imported water purchased from the Santa Clara Valley Water District. It also offers non-tariffed services, including water system operations, maintenance agreements, and antenna site leases; contracted services, sewer operations, and other water related services to water utilities; and a Linebacker protection plan for public drinking water customers in Connecticut and Maine. In addition, the company provides water service to approximately 232,400 connections that serve approximately one million people residing in portions of the cities of San Jose and Cupertino and in the cities of Campbell, Monte Sereno, Saratoga, and the Town of Los Gatos; adjacent unincorporated territories in the County of Santa Clara in the State of California; water service to approximately 141,000 service connections, which serve approximately 461,000 people in 81 municipalities with a service area of approximately 272 square miles in Connecticut and Maine and approximately 3,000 wastewater connections in Southbury, Connecticut; approximately 28,000 service connections that serve approximately 83,000 people in a service area comprising approximately 271 square miles in the region between San Antonio and Austin, Texas; and approximately 950 wastewater connections. Further, it owns undeveloped land in California and Tennessee; commercial and warehouse properties in Tennessee; and commercial properties and parcels of land in Connecticut. The company was formerly known as SJW Corp. and changed its name to SJW Group in November 2016. SJW Group was incorporated in 1985 and is headquartered in San Jose, California.
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