American Water Works (NYSE: AWK) and Cadiz (NASDAQ:CDZI) are both utilities companies, but which is the better stock? We will compare the two businesses based on the strength of their analyst recommendations, profitability, earnings, dividends, valuation, risk and institutional ownership.
Volatility and Risk
American Water Works has a beta of 0.19, suggesting that its stock price is 81% less volatile than the S&P 500. Comparatively, Cadiz has a beta of 0.55, suggesting that its stock price is 45% less volatile than the S&P 500.
84.7% of American Water Works shares are owned by institutional investors. Comparatively, 49.6% of Cadiz shares are owned by institutional investors. 0.3% of American Water Works shares are owned by company insiders. Comparatively, 5.6% of Cadiz shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.
This table compares American Water Works and Cadiz’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|American Water Works||12.69%||10.03%||2.83%|
Earnings & Valuation
This table compares American Water Works and Cadiz’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|American Water Works||$3.36 billion||4.29||$426.00 million||$2.37||34.01|
American Water Works has higher revenue and earnings than Cadiz. Cadiz is trading at a lower price-to-earnings ratio than American Water Works, indicating that it is currently the more affordable of the two stocks.
American Water Works pays an annual dividend of $1.66 per share and has a dividend yield of 2.1%. Cadiz does not pay a dividend. American Water Works pays out 70.0% of its earnings in the form of a dividend. Cadiz has increased its dividend for 9 consecutive years.
This is a breakdown of recent ratings and target prices for American Water Works and Cadiz, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|American Water Works||0||6||3||0||2.33|
American Water Works presently has a consensus target price of $87.86, suggesting a potential upside of 8.95%. Cadiz has a consensus target price of $18.00, suggesting a potential upside of 33.83%. Given Cadiz’s stronger consensus rating and higher probable upside, analysts clearly believe Cadiz is more favorable than American Water Works.
American Water Works beats Cadiz on 9 of the 16 factors compared between the two stocks.
About American Water Works
American Water Works Company, Inc. is a holding company for regulated and market-based subsidiaries throughout the United States and Ontario, Canada. The Company’s Regulated Businesses segment provides water and wastewater services as public utilities in 16 states in the United States as of December 31, 2016. The Market-Based Businesses consists of four segments, including Military Services Group, which conducts operation and maintenance (O&M) of water and wastewater systems for military bases; Contract Operations Group, which conducts O&M of water and wastewater facilities for municipalities and the food and beverage industry; Homeowner Services Group, which primarily provides water and sewer line protection plans for homeowners, and Keystone, which provides water services for natural gas exploration and production companies. The Company, through its subsidiary, American Water Works Service Company, Inc. provides support and operational services for its operating subsidiaries.
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.
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