Global Water Resources (NASDAQ:GWRS) versus Essential Utilities (NYSE:WTRG) Critical Analysis

Essential Utilities (NYSE:WTRG) and Global Water Resources (NASDAQ:GWRS) are both utilities companies, but which is the better investment? We will contrast the two companies based on the strength of their valuation, analyst recommendations, institutional ownership, risk, dividends, earnings and profitability.

Dividends

Essential Utilities pays an annual dividend of $1.44 per share and has a dividend yield of 3.2%. Global Water Resources pays an annual dividend of $0.30 per share and has a dividend yield of 4.4%. Essential Utilities pays out 72.4% of its earnings in the form of a dividend. Global Water Resources pays out 375.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Essential Utilities has raised its dividend for 32 consecutive years and Global Water Resources has raised its dividend for 8 consecutive years.

Earnings & Valuation

This table compares Essential Utilities and Global Water Resources”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Essential Utilities	$2.60 billion	4.95	$616.37 million	$1.99	22.60
Global Water Resources	$55.76 million	3.64	$2.96 million	$0.08	84.82

Essential Utilities has higher revenue and earnings than Global Water Resources. Essential Utilities 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.

Profitability

This table compares Essential Utilities and Global Water Resources’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Essential Utilities	21.79%	8.36%	2.93%
Global Water Resources	3.98%	2.06%	0.37%

Risk & Volatility

Essential Utilities has a beta of 0.62, suggesting that its share price is 38% less volatile than the S&P 500. Comparatively, Global Water Resources has a beta of 0.96, suggesting that its share price is 4% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Essential Utilities and Global Water Resources, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Essential Utilities	1	0	4	0	2.60
Global Water Resources	1	2	0	0	1.67

Essential Utilities presently has a consensus target price of $44.75, indicating a potential downside of 0.48%. Global Water Resources has a consensus target price of $15.00, indicating a potential upside of 121.04%. Given Global Water Resources’ higher probable upside, analysts plainly believe Global Water Resources is more favorable than Essential Utilities.

Institutional & Insider Ownership

74.8% of Essential Utilities shares are held by institutional investors. Comparatively, 27.9% of Global Water Resources shares are held by institutional investors. 0.4% of Essential Utilities shares are held by company insiders. Comparatively, 53.7% of Global Water Resources shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Summary

Essential Utilities beats Global Water Resources on 12 of the 17 factors compared between the two stocks.

About Essential Utilities

Essential Utilities, Inc. is a regulated utility company that provides water and wastewater services through its Aqua operations and natural gas distribution through Peoples Natural Gas. Its services include treating and delivering drinking water, collecting and treating wastewater, and supplying natural gas to homes and businesses. The company traces its water utility roots to the Springfield Water Company, founded in Pennsylvania in 1886. It adopted the Essential Utilities name in 2020, following its acquisition of Peoples Natural Gas and the expansion of its business beyond water and wastewater services.

About Global Water Resources

Global Water Resources, Inc. is a water resource management company that owns and operates water, wastewater and recycled water utilities in Arizona. Its services include supplying potable water, collecting and treating wastewater, and providing recycled water for non-potable uses. The company serves communities in the Phoenix and Tucson metropolitan areas. Its integrated “Total Water Management” approach connects water, wastewater and recycled water services to support efficient use and reuse of local water supplies.