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YORW or SJW: Which Utility Water Supply Stock to Hold Now?
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A continuous uninterrupted supply of clean potable water and reliable sewer services are essential for healthy and hygienic living. Per the Environmental Protection Agency (“EPA”), at present, more than 51,000 community water systems and 16,000 community wastewater systems in the United States are providing water solutions for customers. Since the U.S. water utility industry is highly fragmented, upgrading aging assets to provide quality services is the need of the hour. Hence, utilities continuously replace old pipelines and add new ones to expand operations.
Utility operators own storage tanks, treatment plants and desalination plants to supply uninterrupted potable water across customer classes. Despite the ample presence of water worldwide, less than 1% of the total water volume is fit for human use. However, due to the delay in essential pipeline repairs and maintenance, 2.1 trillion gallons of treated water are lost every year in the United States.
Upgrade and maintenance of old pipelines, along with the proper usage of potable water and water-efficient appliances, can help stop the wastage of this priceless resource. However, huge investments are required to upgrade and maintain the aging U.S. water infrastructure. Per the EPA, an estimated $744 billion investment is necessary to maintain and expand the drinking water and wastewater service to meet demand over the next 20 years.
In addition, the Bipartisan Infrastructure Law provided $50 billion for the EPA to strengthen the drinking water and wastewater systems of the United States. A major portion of the investment will be directed toward upgrading the water infrastructure serving disadvantaged communities.
Amid such a backdrop, we run a comparative analysis on two stocks from the Zacks Utility - Water Supply industry — The York Water Company (YORW - Free Report) and SJW Group (SJW - Free Report) — to decide which stock is a better pick for your portfolio now.
The York Water Company has a market capitalization of $622.5 million, while the same for SJW Group is $1,940 million.
Growth Projection & Surprise History
The Zacks Consensus Estimate for The York Water Company’s 2022 earnings is pegged at $1.36 per share on revenues of $57 million. The bottom line suggests a year-over-year increase of 4.6%.
The Zacks Consensus Estimate for SJW Group’s fiscal 2022 earnings is pegged at $2.34 per share on revenues of $607.9 million. The bottom line suggests a year-over-year increase of 15.3%.
The York Water Company delivered an average earnings surprise of 2.2% in the last four quarters, while SJW Group delivered a negative average earnings surprise of 7.5% in the last four quarters.
Price Performance
In the past month, YORW shares have rallied 0.2% against the industry's 3.0% decline. Shares of SJW have declined 2.8% in the same period.
Image Source: Zacks Investment Research
Debt to Capital
Debt to capital is a good indicator of the financial position of a company. The indicator shows how much debt is used to run the business. The York Water Company and SJW Group have a debt to capital of 36.8% and 61.4%, respectively, compared with the industry’s average debt-to-capital level of 49.4%.
Dividend Yield
Utility companies generally distribute dividends. Currently, the dividend yield for The York Water Company and SJW Group is 1.8% and 2.3%, respectively, compared with the industry average of 1.9%.
Return on Equity
Return on Equity (“ROE”) is a measure of a company’s efficiency in utilizing shareholders’ funds. ROE for the trailing 12 months for The York Water Company and SJW Group is 10.7% and 4.5%, respectively. YORW has outperformed the industry’s ROE of 9.5%.
Outcome
Though both the companies are efficiently providing services for customers, The York Water Company, with its positive earnings surprise, efficient debt management, higher ROE and positive return over the past month, is a better stock to add to your portfolio.
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YORW or SJW: Which Utility Water Supply Stock to Hold Now?
A continuous uninterrupted supply of clean potable water and reliable sewer services are essential for healthy and hygienic living. Per the Environmental Protection Agency (“EPA”), at present, more than 51,000 community water systems and 16,000 community wastewater systems in the United States are providing water solutions for customers. Since the U.S. water utility industry is highly fragmented, upgrading aging assets to provide quality services is the need of the hour. Hence, utilities continuously replace old pipelines and add new ones to expand operations.
Utility operators own storage tanks, treatment plants and desalination plants to supply uninterrupted potable water across customer classes. Despite the ample presence of water worldwide, less than 1% of the total water volume is fit for human use. However, due to the delay in essential pipeline repairs and maintenance, 2.1 trillion gallons of treated water are lost every year in the United States.
Upgrade and maintenance of old pipelines, along with the proper usage of potable water and water-efficient appliances, can help stop the wastage of this priceless resource. However, huge investments are required to upgrade and maintain the aging U.S. water infrastructure. Per the EPA, an estimated $744 billion investment is necessary to maintain and expand the drinking water and wastewater service to meet demand over the next 20 years.
In addition, the Bipartisan Infrastructure Law provided $50 billion for the EPA to strengthen the drinking water and wastewater systems of the United States. A major portion of the investment will be directed toward upgrading the water infrastructure serving disadvantaged communities.
Amid such a backdrop, we run a comparative analysis on two stocks from the Zacks Utility - Water Supply industry — The York Water Company (YORW - Free Report) and SJW Group (SJW - Free Report) — to decide which stock is a better pick for your portfolio now.
Both the stocks currently carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The York Water Company has a market capitalization of $622.5 million, while the same for SJW Group is $1,940 million.
Growth Projection & Surprise History
The Zacks Consensus Estimate for The York Water Company’s 2022 earnings is pegged at $1.36 per share on revenues of $57 million. The bottom line suggests a year-over-year increase of 4.6%.
The Zacks Consensus Estimate for SJW Group’s fiscal 2022 earnings is pegged at $2.34 per share on revenues of $607.9 million. The bottom line suggests a year-over-year increase of 15.3%.
The York Water Company delivered an average earnings surprise of 2.2% in the last four quarters, while SJW Group delivered a negative average earnings surprise of 7.5% in the last four quarters.
Price Performance
In the past month, YORW shares have rallied 0.2% against the industry's 3.0% decline. Shares of SJW have declined 2.8% in the same period.
Image Source: Zacks Investment Research
Debt to Capital
Debt to capital is a good indicator of the financial position of a company. The indicator shows how much debt is used to run the business. The York Water Company and SJW Group have a debt to capital of 36.8% and 61.4%, respectively, compared with the industry’s average debt-to-capital level of 49.4%.
Dividend Yield
Utility companies generally distribute dividends. Currently, the dividend yield for The York Water Company and SJW Group is 1.8% and 2.3%, respectively, compared with the industry average of 1.9%.
Return on Equity
Return on Equity (“ROE”) is a measure of a company’s efficiency in utilizing shareholders’ funds. ROE for the trailing 12 months for The York Water Company and SJW Group is 10.7% and 4.5%, respectively. YORW has outperformed the industry’s ROE of 9.5%.
Outcome
Though both the companies are efficiently providing services for customers, The York Water Company, with its positive earnings surprise, efficient debt management, higher ROE and positive return over the past month, is a better stock to add to your portfolio.