Critical Analysis: Pure Cycle (PCYO) and Middlesex Water (MSEX)

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

Risk and Volatility

Middlesex Water has a beta of 0.44, meaning that its stock price is 56% less volatile than the S&P 500. Comparatively, Pure Cycle has a beta of 0.59, meaning that its stock price is 41% less volatile than the S&P 500.

Insider & Institutional Ownership

51.9% of Middlesex Water shares are held by institutional investors. Comparatively, 66.3% of Pure Cycle shares are held by institutional investors. 3.5% of Middlesex Water shares are held by company insiders. Comparatively, 4.8% of Pure Cycle shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Profitability

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

Net Margins Return on Equity Return on Assets
Middlesex Water 17.34% 10.06% 3.44%
Pure Cycle -40.09% -1.54% -1.51%

Dividends

Middlesex Water pays an annual dividend of $0.89 per share and has a dividend yield of 2.1%. Pure Cycle does not pay a dividend. Middlesex Water pays out 64.5% of its earnings in the form of a dividend.

Analyst Ratings

This is a summary of current ratings and recommmendations for Middlesex Water and Pure Cycle, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Middlesex Water 0 1 0 0 2.00
Pure Cycle 0 0 0 0 N/A

Middlesex Water presently has a consensus price target of $44.00, indicating a potential upside of 2.92%. Given Middlesex Water’s higher possible upside, equities analysts plainly believe Middlesex Water is more favorable than Pure Cycle.

Valuation & Earnings

This table compares Middlesex Water and Pure Cycle’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Middlesex Water $130.77 million 5.35 $22.80 million $1.38 30.98
Pure Cycle $1.22 million 182.10 -$1.71 million N/A N/A

Middlesex Water has higher revenue and earnings than Pure Cycle.

Summary

Middlesex Water beats Pure Cycle on 7 of the 12 factors compared between the two stocks.

Middlesex Water Company Profile

Middlesex Water Company, together with its subsidiaries, owns and operates regulated water utility and wastewater systems. It operates in two segments, Regulated and Non-Regulated. The Regulated segment engages in collecting, treating, and distributing water on a retail and wholesale basis to residential, commercial, industrial, and fire protection customers in parts of New Jersey, Delaware, and Pennsylvania. This segment also includes 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 founded in 1897 and is headquartered in Iselin, New Jersey.

Pure Cycle Company Profile

Pure Cycle Corporation designs, constructs, operates, and maintains water and wastewater systems in the Denver metropolitan area and Colorado Front Range in the United States. It provides water production, storage, treatment, retail distribution systems bulk transmission, wastewater collection and treatment, irrigation water treatment and transmission, construction management, billing and collection, and emergency response services. The company offers its services to wholesale customers, which include commercial and industrial customers, and local governmental entities that provide water and wastewater services to their end-use customers. It also leases its farms. The company was founded in 1976 and is based in Watkins, Colorado.

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