Critical Contrast: SJW Corporation (SJW) vs. Artesian Resources (ARTNA)

Artesian Resources (NASDAQ: ARTNA) and SJW Corporation (NYSE:SJW) are both small-cap utilities companies, but which is the better stock? We will contrast the two companies based on the strength of their dividends, institutional ownership, valuation, analyst recommendations, risk, earnings and profitability.

Institutional & Insider Ownership

40.3% of Artesian Resources shares are owned by institutional investors. Comparatively, 48.4% of SJW Corporation shares are owned by institutional investors. 20.6% of Artesian Resources shares are owned by insiders. Comparatively, 21.1% of SJW Corporation shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of recent ratings for Artesian Resources and SJW Corporation, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Artesian Resources 0 1 0 0 2.00
SJW Corporation 0 0 1 0 3.00

Artesian Resources presently has a consensus target price of $41.00, suggesting a potential upside of 13.86%. Given Artesian Resources’ higher probable upside, research analysts plainly believe Artesian Resources is more favorable than SJW Corporation.

Volatility and Risk

Artesian Resources has a beta of 0.1, meaning that its stock price is 90% less volatile than the S&P 500. Comparatively, SJW Corporation has a beta of 0.18, meaning that its stock price is 82% less volatile than the S&P 500.

Dividends

Artesian Resources pays an annual dividend of $0.93 per share and has a dividend yield of 2.6%. SJW Corporation pays an annual dividend of $0.87 per share and has a dividend yield of 1.6%. Artesian Resources pays out 63.3% of its earnings in the form of a dividend. SJW Corporation pays out 32.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Artesian Resources has increased its dividend for 49 consecutive years. Artesian Resources is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings and Valuation

This table compares Artesian Resources and SJW Corporation’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Artesian Resources $80.94 million 4.09 $36.76 million $1.47 24.50
SJW Corporation $362.77 million 3.08 $142.70 million $2.67 20.44

SJW Corporation has higher revenue and earnings than Artesian Resources. SJW Corporation is trading at a lower price-to-earnings ratio than Artesian Resources, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Artesian Resources and SJW Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Artesian Resources 15.86% 9.21% 2.82%
SJW Corporation 15.17% 11.96% 3.48%

Summary

SJW Corporation beats Artesian Resources on 11 of the 17 factors compared between the two stocks.

About Artesian Resources

Artesian Resources Corporation is a holding company. The Company’s subsidiaries offer water, wastewater and other services on the Delmarva Peninsula. The Company distributes and sells water, including water for public and private fire protection, to residential, commercial, industrial, municipal and utility customers in the states of Delaware, Maryland and Pennsylvania. The Company also provides wastewater services to customers in Delaware. In addition, the Company provides contract water and wastewater operations, and water, sewer and internal Service Line Protection Plans. As of December 31, 2016, the Company was the holding company of five regulated public utilities: Artesian Water Company, Inc., Artesian Water Pennsylvania, Inc., Artesian Water Maryland, Inc., Artesian Wastewater Management, Inc. and Artesian Wastewater Maryland, Inc., and three non-regulated subsidiaries: Artesian Utility Development, Inc., Artesian Development Corporation and Artesian Consulting Engineers, Inc.

About SJW Corporation

SJW Group, formerly SJW Corp., is a holding company. The Company’s subsidiaries include San Jose Water Company, SJWTX, Inc., SJW Land Company and Texas Water Alliance Limited (TWA). SJWTX, Inc. is doing business as Canyon Lake Water Service Company (CLWSC). It operates through the segments, which include Water Utility Services, Real Estate Services and All Other. Its Water Utility Services segment provides water utility and utility-related services to its customers through its subsidiaries, such as San Jose Water Company, CLWSC and TWA. The Real Estate Services segment includes property management and investment activity conducted by SJW Land Company. The Company’s All Other segment includes its other business activities. San Jose Water Company distributes water to customers in accordance with accepted water utility methods. SJW Land Company owns undeveloped land, and owns and operates a portfolio of commercial buildings in the states of California, Texas, Arizona and Tennessee.

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