Pure Cycle (NASDAQ:PCYO) vs. H2O Innovation (OTCMKTS:HEOFF) Head to Head Survey

Pure Cycle (NASDAQ:PCYO) and H2O Innovation (OTCMKTS:HEOFF) are both small-cap utilities companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, earnings, profitability, risk, institutional ownership, analyst recommendations and dividends.

Analyst Ratings

This is a summary of current ratings for Pure Cycle and H2O Innovation, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Pure Cycle	0	0	0	0	N/A
H2O Innovation	0	0	3	0	3.00

H2O Innovation has a consensus price target of $3.50, indicating a potential upside of 12.18%. Given H2O Innovation’s higher probable upside, analysts plainly believe H2O Innovation is more favorable than Pure Cycle.

Valuation and Earnings

This table compares Pure Cycle and H2O Innovation’s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Pure Cycle	$14.59 million	15.95	$4.70 million	$0.27	35.78
H2O Innovation	$189.12 million	1.48	-$970,000.00	($0.01)	-312.01

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

Institutional & Insider Ownership

51.4% of Pure Cycle shares are owned by institutional investors. 15.9% of Pure Cycle shares are owned by insiders. Comparatively, 4.9% of H2O Innovation shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Pure Cycle	34.68%	5.49%	4.89%
H2O Innovation	-0.68%	5.82%	2.73%

Risk & Volatility

Pure Cycle has a beta of 0.97, suggesting that its stock price is 3% less volatile than the S&P 500. Comparatively, H2O Innovation has a beta of 0.47, suggesting that its stock price is 53% less volatile than the S&P 500.

Summary

Pure Cycle beats H2O Innovation on 9 of the 13 factors compared between the two stocks.

About Pure Cycle

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 operates in two segments, Wholesale Water and Wastewater Services, and Land Development. The company engages in the wholesale water production, storage, treatment, and distribution systems; wastewater collection and treatment systems; development of 930-acre master-planned community; oil and gas leasing business; and construction and leasing of single-family homes. It serves domestic, commercial, and industrial customers in the Eastern Denver metropolitan region. Pure Cycle Corporation was incorporated in 1976 and is based in Watkins, Colorado.

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.