AquaVenture (WAAS) versus California Water Service Group (CWT) Critical Contrast

AquaVenture (NYSE: WAAS) and California Water Service Group (NYSE:CWT) are both utilities companies, but which is the superior investment? We will contrast the two businesses based on the strength of their earnings, institutional ownership, risk, analyst recommendations, profitability, valuation and dividends.

Institutional & Insider Ownership

38.8% of AquaVenture shares are owned by institutional investors. Comparatively, 68.5% of California Water Service Group shares are owned by institutional investors. 55.9% of AquaVenture shares are owned by insiders. Comparatively, 1.0% of California Water Service Group shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Dividends

California Water Service Group pays an annual dividend of $0.72 per share and has a dividend yield of 1.6%. AquaVenture does not pay a dividend. California Water Service Group pays out 50.3% of its earnings in the form of a dividend. California Water Service Group has raised its dividend for 49 consecutive years.

Analyst Recommendations

This is a summary of recent recommendations and price targets for AquaVenture and California Water Service Group, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
AquaVenture 0 0 4 1 3.20
California Water Service Group 2 4 0 0 1.67

AquaVenture currently has a consensus price target of $22.00, suggesting a potential upside of 46.18%. California Water Service Group has a consensus price target of $33.00, suggesting a potential downside of 25.00%. Given AquaVenture’s stronger consensus rating and higher possible upside, equities research analysts plainly believe AquaVenture is more favorable than California Water Service Group.

Earnings & Valuation

This table compares AquaVenture and California Water Service Group’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
AquaVenture $114.10 million 3.49 -$20.47 million ($1.01) -14.90
California Water Service Group $609.37 million 3.47 $48.67 million $1.43 30.77

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

Profitability

This table compares AquaVenture and California Water Service Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
AquaVenture -22.56% -7.38% -5.01%
California Water Service Group 10.46% 10.31% 2.75%

Summary

California Water Service Group beats AquaVenture on 9 of the 16 factors compared between the two stocks.

About AquaVenture

AquaVenture Holdings Limited is a multinational provider of Water-as-a-Service solutions. The Company’s segments are Seven Seas Water and Quench. The Seven Seas Water segment provides outsourced desalination solutions and wastewater treatment for governmental, municipal, industrial and hospitality customers. The Quench segment provides bottleless filtered water coolers and other products that use filtered water as an input, such as ice machines, sparkling water dispensers and coffee brewers, to customers throughout the United States typically under multi-year contracts. The Company’s solutions utilize seawater reverse osmosis and other purification technologies to produce potable and industrial process water in high volumes for customers operating in regions with limited access to potable water. As of December 31, 2016, it operated 10 water treatment facilities in the Caribbean region and South America producing approximately eight billion gallons of purified water per year.

About California Water Service Group

California Water Service Group is a holding company. The Company operates through the supply and distribution of water and providing water-related utility services segment. The Company, through its subsidiaries, provides non-regulated services and non-regulated services to private companies and municipalities. The bulk of the business consists of the production, purchase, storage, treatment, testing, distribution and sale of water for domestic, industrial, public and irrigation uses, and for fire protection. It also provides non-regulated water-related services. The non-regulated services include water system operation, billing and meter reading services. Non-regulated operations also include the lease of communication antenna sites, lab services and promotion of other non-regulated services. The Company under its non-regulated contract arrangements, operates municipally owned water systems, privately owned water and recycled water distribution systems.

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