Comparing H2O Innovation (OTCMKTS:HEOFF) and Middlesex Water (NASDAQ:MSEX)

Middlesex Water (NASDAQ:MSEX) and H2O Innovation (OTCMKTS:HEOFF) are both small-cap utilities companies, but which is the superior business? We will compare the two businesses based on the strength of their dividends, earnings, institutional ownership, risk, valuation, profitability and analyst recommendations.

Profitability

This table compares Middlesex Water and H2O Innovation’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Middlesex Water	23.26%	9.59%	3.48%
H2O Innovation	-0.68%	5.82%	2.73%

Risk and Volatility

Middlesex Water has a beta of 0.75, meaning that its share price is 25% less volatile than the S&P 500. Comparatively, H2O Innovation has a beta of 0.47, meaning that its share price is 53% less volatile than the S&P 500.

Earnings and Valuation

This table compares Middlesex Water and H2O Innovation”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Middlesex Water	$194.69 million	5.66	$42.82 million	$2.59	22.58
H2O Innovation	$189.12 million	1.48	-$970,000.00	($0.01)	-312.01

Middlesex Water has higher revenue and earnings than H2O Innovation. H2O Innovation is trading at a lower price-to-earnings ratio than Middlesex Water, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

79.5% of Middlesex Water shares are held by institutional investors. 1.9% of Middlesex Water shares are held by insiders. Comparatively, 4.9% of H2O Innovation shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of current recommendations and price targets for Middlesex Water and H2O Innovation, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Middlesex Water	0	1	1	0	2.50
H2O Innovation	0	0	0	0	0.00

Middlesex Water presently has a consensus price target of $61.67, indicating a potential upside of 5.43%. Given Middlesex Water’s stronger consensus rating and higher probable upside, research analysts plainly believe Middlesex Water is more favorable than H2O Innovation.

Summary

Middlesex Water beats H2O Innovation on 13 of the 14 factors compared between the two stocks.

About Middlesex Water

Middlesex Water Company owns and operates regulated water utility and wastewater systems. It operates in Regulated and Non-Regulated segments. The Regulated segment collects, treats, and distributes water on a retail and wholesale basis to residential, commercial, industrial, and fire protection customers, as well as provides 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 incorporated in 1896 and is headquartered in Iselin, New Jersey.

About H2O Innovation

H2O Innovation Inc. designs and provides integrated water treatment solutions based on membrane filtration technology. It operates through three segments: Water Technologies and Services, Specialty Products, and Operation and Maintenance Services. The company offers membrane filtration technology for municipal, industrial, energy, and natural resources end-users; and aftersales services, as well as digital solutions to monitor and optimize water treatment plants. Its products include the FiberFlex open-source technologies for water treatment systems; the flexMBR for wastewater treatment systems; SILO system for wastewater and water reuse treatment; and FlexBox, a mobile fleet of water and wastewater treatment systems, such as containerized ultrafiltration or reverse osmosis (RO) systems. The company also offers specialty chemicals, consumables, and specialized products for the water industry, including RO membrane chemicals, such as antiscalants, flocculants, biocides, and cleaning chemicals; corrosion resistant equipment for desalination plants; flexible grooved-end couplings, fiberglass reinforced polyester cartridge filter housings, self-cleaning disc and screen filters, bag filters, cartridges, and strainers; and maple farming equipment. In addition, it operates, maintains, and repairs water and wastewater treatment systems, distribution equipment, and associated assets. The company was incorporated in 1995 and is headquartered in Quebec City, Canada. As of December 8, 2023, H2O Innovation Inc. was taken private.