Critical Analysis: Cadiz (CDZI) versus Connecticut Water Service (CTWS)

Cadiz (NASDAQ: CDZI) and Connecticut Water Service (NASDAQ:CTWS) are both small-cap consumer staples companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, analyst recommendations, valuation, profitability, institutional ownership, risk and earnings.

Volatility & Risk

Cadiz has a beta of 0.5, suggesting that its share price is 50% less volatile than the S&P 500. Comparatively, Connecticut Water Service has a beta of 0.01, suggesting that its share price is 99% less volatile than the S&P 500.

Dividends

Connecticut Water Service pays an annual dividend of $1.19 per share and has a dividend yield of 2.3%. Cadiz does not pay a dividend. Connecticut Water Service pays out 57.8% of its earnings in the form of a dividend. Cadiz has raised its dividend for 48 consecutive years.

Valuation and Earnings

This table compares Cadiz and Connecticut Water Service’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Cadiz $410,000.00 778.54 -$26.33 million ($2.05) -6.83
Connecticut Water Service $105.32 million 6.02 $23.38 million $2.06 25.49

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

Profitability

This table compares Cadiz and Connecticut Water Service’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Cadiz -7,848.01% N/A -49.62%
Connecticut Water Service 22.00% 9.16% 2.80%

Analyst Recommendations

This is a breakdown of current ratings for Cadiz and Connecticut Water Service, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Cadiz 0 0 1 0 3.00
Connecticut Water Service 0 1 0 0 2.00

Cadiz presently has a consensus target price of $18.00, indicating a potential upside of 28.57%. Connecticut Water Service has a consensus target price of $57.00, indicating a potential upside of 8.55%. Given Cadiz’s stronger consensus rating and higher probable upside, equities analysts clearly believe Cadiz is more favorable than Connecticut Water Service.

Insider and Institutional Ownership

49.8% of Cadiz shares are owned by institutional investors. Comparatively, 45.8% of Connecticut Water Service shares are owned by institutional investors. 5.6% of Cadiz shares are owned by company insiders. Comparatively, 2.5% of Connecticut Water Service shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Summary

Cadiz beats Connecticut Water Service on 9 of the 17 factors compared between the two stocks.

Cadiz Company Profile

Cadiz Inc. is a land and water resource development company. As of December 31, 2016, the Company had 45,000 acres of land in three areas of eastern San Bernardino County, California. The Company’s primary business is to acquire and develop land with water resources for various uses, including groundwater supply, groundwater storage and agriculture. As of December 31, 2016, the Company was focused on the development of the Cadiz Valley Water Conservation, Recovery and Storage Project (Water Project or Project), which captures and conserves native groundwater being lost to evaporation from the aquifer system beneath its 34,000-acre property in the Cadiz and Fenner valleys of eastern San Bernardino County (the Cadiz/Fenner Property), and delivers it to water providers throughout Southern California. Its development activities include water resource and agricultural development at its San Bernardino County properties.

Connecticut Water Service Company Profile

Connecticut Water Service, Inc. is a non-operating holding company. The Company’s income is derived from the earnings of its subsidiary companies, including The Connecticut Water Company (Connecticut Water), The Maine Water Company (Maine Water), New England Water Utility Services, Inc. (NEWUS),The Avon Water Company (AWC) and Chester Realty Company (Chester Realty). It operates through three segments: Water Operations, Real Estate Transactions, and Services and Rentals. The Water Activities segment consists of its regulated water activities to supply public drinking water to customers. The Real Estate Transactions segment involves the sale or donation for income tax benefits of its real estate holdings. Services and Rentals segment provides contracted services to water and wastewater utilities and other clients, and also leases certain of the Company’s properties to third parties through unregulated companies in the State of Connecticut and through Maine Water in the State of Maine.

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