American Water Works (NYSE:AWK – Get Free Report) and Global Water Resources (NASDAQ:GWRS – Get Free Report) are both utilities companies, but which is the better investment? We will contrast the two companies based on the strength of their analyst recommendations, institutional ownership, dividends, risk, profitability, valuation and earnings.
Profitability
This table compares American Water Works and Global Water Resources’ net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| American Water Works | 21.26% | 10.14% | 3.19% |
| Global Water Resources | 5.22% | 3.05% | 0.54% |
Dividends
American Water Works pays an annual dividend of $3.58 per share and has a dividend yield of 2.4%. Global Water Resources pays an annual dividend of $0.30 per share and has a dividend yield of 4.1%. American Water Works pays out 62.0% 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. American Water Works has raised its dividend for 18 consecutive years and Global Water Resources has raised its dividend for 8 consecutive years.
Risk and Volatility
American Water Works has a beta of 0.56, indicating that its stock price is 44% less volatile than the S&P 500. Comparatively, Global Water Resources has a beta of 0.96, indicating that its stock price is 4% less volatile than the S&P 500.
Institutional & Insider Ownership
86.6% of American Water Works shares are owned by institutional investors. Comparatively, 27.9% of Global Water Resources shares are owned by institutional investors. 0.1% of American Water Works shares are owned by insiders. Comparatively, 53.7% of Global Water Resources shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.
Analyst Recommendations
This is a breakdown of current ratings and target prices for American Water Works and Global Water Resources, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| American Water Works | 1 | 7 | 1 | 0 | 2.00 |
| Global Water Resources | 0 | 2 | 0 | 0 | 2.00 |
American Water Works currently has a consensus target price of $141.14, indicating a potential downside of 6.17%. Global Water Resources has a consensus target price of $15.00, indicating a potential upside of 106.04%. Given Global Water Resources’ higher possible upside, analysts plainly believe Global Water Resources is more favorable than American Water Works.
Earnings and Valuation
This table compares American Water Works and Global Water Resources”s top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| American Water Works | $5.14 billion | 5.83 | $1.11 billion | $5.77 | 26.07 |
| Global Water Resources | $55.76 million | 3.76 | $2.96 million | $0.08 | 91.00 |
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.
Summary
American Water Works beats Global Water Resources on 11 of the 16 factors compared between the two stocks.
About American Water Works
American Water Works Company, Inc., through its subsidiaries, provides water and wastewater services in the United States. It offers water and wastewater services to approximately 1,700 communities in 14 states serving approximately 3.5 million active customers. The company serves residential customers; commercial customers, including food and beverage providers, commercial property developers and proprietors, and energy suppliers; fire service and private fire customers; industrial customers, such as large-scale manufacturers, mining, and production operations; public authorities comprising government buildings and other public sector facilities, such as schools and universities; and other utilities and community water and wastewater systems. It also provides water and wastewater services on military installations; and undertakes contracts with municipal customers, primarily to operate and manage water and wastewater facilities, as well as offers other related services. In addition, the company operates approximately 80 surface water treatment plants; 540 groundwater treatment plants; 175 wastewater treatment plants; 53,700 miles of transmission, distribution, and collection mains and pipes; 1,200 groundwater wells; 1,700 water and wastewater pumping stations; 1,100 treated water storage facilities; and 74 dams. The company was founded in 1886 and is headquartered in Camden, New Jersey.
About Global Water Resources
Global Water Resources, Inc., a water resource management company, owns, operates, and manages regulated water, wastewater, and recycled water systems primarily in metropolitan Phoenix and Tucson, Arizona. It serves approximately 82,000 people in approximately 32,000 homes. The company was founded in 2003 and is based in Phoenix, Arizona.
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