Middlesex Water (NASDAQ:MSEX) versus H2O Innovation (OTCMKTS:HEOFF) Financial Analysis

H2O Innovation (OTCMKTS:HEOFF) and Middlesex Water (NASDAQ:MSEX) are both small-cap utilities companies, but which is the better stock? We will compare the two companies based on the strength of their institutional ownership, risk, valuation, analyst recommendations, earnings, dividends and profitability.

Insider & Institutional Ownership

79.5% of Middlesex Water shares are owned by institutional investors. 4.9% of H2O Innovation shares are owned by company insiders. Comparatively, 1.9% of Middlesex Water shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Analyst Ratings

This is a summary of current recommendations and price targets for H2O Innovation and Middlesex Water, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
H2O Innovation	0	0	0	0	0.00
Middlesex Water	0	1	1	0	2.50

Middlesex Water has a consensus target price of $61.67, suggesting a potential upside of 6.32%. Given Middlesex Water’s stronger consensus rating and higher probable upside, analysts plainly believe Middlesex Water is more favorable than H2O Innovation.

Volatility & Risk

H2O Innovation has a beta of 0.47, indicating that its stock price is 53% less volatile than the S&P 500. Comparatively, Middlesex Water has a beta of 0.75, indicating that its stock price is 25% less volatile than the S&P 500.

Valuation and Earnings

This table compares H2O Innovation and Middlesex Water”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
H2O Innovation	$189.12 million	1.48	-$970,000.00	($0.01)	-312.01
Middlesex Water	$194.69 million	5.61	$42.82 million	$2.59	22.39

Middlesex Water has higher revenue and earnings than H2O Innovation. H2O Innovation is trading at a lower price-to-earnings ratio than Middlesex Water, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares H2O Innovation and Middlesex Water’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
H2O Innovation	-0.68%	5.82%	2.73%
Middlesex Water	23.26%	9.59%	3.48%

Summary

Middlesex Water beats H2O Innovation on 13 of the 14 factors compared between the two stocks.

About H2O Innovation

H2O Innovation Inc. designs and provides integrated water treatment solutions based on membrane filtration technology. It operates through three segments: Water Technologies and Services, Specialty Products, and Operation and Maintenance Services. The company offers membrane filtration technology for municipal, industrial, energy, and natural resources end-users; and aftersales services, as well as digital solutions to monitor and optimize water treatment plants. Its products include the FiberFlex open-source technologies for water treatment systems; the flexMBR for wastewater treatment systems; SILO system for wastewater and water reuse treatment; and FlexBox, a mobile fleet of water and wastewater treatment systems, such as containerized ultrafiltration or reverse osmosis (RO) systems. The company also offers specialty chemicals, consumables, and specialized products for the water industry, including RO membrane chemicals, such as antiscalants, flocculants, biocides, and cleaning chemicals; corrosion resistant equipment for desalination plants; flexible grooved-end couplings, fiberglass reinforced polyester cartridge filter housings, self-cleaning disc and screen filters, bag filters, cartridges, and strainers; and maple farming equipment. In addition, it operates, maintains, and repairs water and wastewater treatment systems, distribution equipment, and associated assets. The company was incorporated in 1995 and is headquartered in Quebec City, Canada. As of December 8, 2023, H2O Innovation Inc. was taken private.

About Middlesex Water

Middlesex Water Company owns and operates regulated water utility and wastewater systems. It operates in Regulated and Non-Regulated segments. The Regulated segment collects, treats, and distributes water on a retail and wholesale basis to residential, commercial, industrial, and fire protection customers, as well as provides regulated wastewater systems in New Jersey and Delaware. The Non-Regulated segment provides non-regulated contract services for the operation and maintenance of municipal and private water and wastewater systems in New Jersey and Delaware. Middlesex Water Company was incorporated in 1896 and is headquartered in Iselin, New Jersey.