CWCO or GWRS: Which is a Better Utility Water Supply Stock?
The Zacks Utility - Water Supply industry includes companies that provide drinking water and wastewater services to industrial, commercial and residential customers, along with numerous military bases across the country.
Healthy and hygienic living requires a constant, uninterrupted flow of clean potable water and reliable sewer services. Water utilities carry out the crucial work every day to meet millions of Americans’ increasing demand for potable water. Storage tanks, treatment and desalination facilities are owned by utility operators to provide continuous potable water to all types of customers.
Water utility operators also own more than 2 million miles of aging pipelines. Per the U.S. Environmental Protection Agency, an estimated $896 billion investment is necessary to maintain and expand drinking water and wastewater services to meet the demand over the next 20 years.
Given the current situation, investor-owned water utilities and the government are funding water and wastewater infrastructure projects to upgrade the infrastructure. Still-high interest rates remain a concern as the water utilities sometimes need to borrow to fund their long-term capital projects.
In this article, we have run a comparative analysis on two Zacks Utility – Water Supply companies — Consolidated Water Co. Ltd. CWCO and Global Water Resources Inc. GWRS — to decide which one is a better pick for your portfolio.
Both companies carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Consolidated Water has a market capitalization of $429.6 million, while Global Water Resources has $303.4 million.
Growth Projections
The Zacks Consensus Estimate for CWCO’s 2024 earnings is pinned at $1.24 per share on revenues of $141.05 million. This implies a year-over-year bottom-line decrease of 29.6% and top-line decline of 18%.
The Zacks Consensus Estimate mark for GWRS’ 2024 earnings is pegged at 31 cents per share on revenues of $53.05 million. This indicates year-over-year bottom-line and top-line growth of 19.2% and 0.04%, respectively.
Return on Equity (ROE)
ROE is a measure of a company’s efficiency in utilizing shareholders’ funds. The current ROE for Consolidated Water and Global Water Resources is 13.39% and 13.64%, respectively, compared with the industry’s 9.6%.
Debt Position & Liquidity
The debt-to-capital ratio is a vital indicator of the financial position of a company. It shows the amount of debt used to run a business. Currently, Consolidated Water and Global Water Resources have a debt-to-capital of 0.14% and 68.86%, respectively, compared with the industry’s 54.64%.
The current ratio, if more than one, indicates that the company has enough financial flexibility to meet its near-term debt obligations. CWCO and GWRS have a current ratio of 4.14 and 0.82, respectively.
Dividend Yield
Utility companies generally distribute dividends and increase shareholders’ value. Currently, the dividend yield for Consolidated Water is 1.39% and that for Global Water Resources is 2.4% compared with the Zacks S&P 500 Composite’s average of 1.32%.
Price Performance
In the past six months, shares of GWRS have risen 20.4%, while those of CWCO have lost 8%. The industry declined 5.4% in the same time frame.
Image Source: Zacks Investment Research
Outcome
Both Consolidated Water and Global Water Resources are evenly matched and good picks for your portfolio. Both companies are focused on providing water and wastewater services to customers. However, our choice at this moment is GWRS, given its better growth projections, ROE, dividend yield and price performance than CWCO.
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Consolidated Water Co. Ltd. (CWCO) : Free Stock Analysis Report
Global Water Resources, Inc. (GWRS) : Free Stock Analysis Report
