Analyzing H2O America (NASDAQ:HTO) and Pennon Group (OTCMKTS:PEGRF)

H2O America (NASDAQ:HTO) and Pennon Group (OTCMKTS:PEGRF) are both utilities companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, valuation, dividends, profitability, analyst recommendations, institutional ownership and risk.

Institutional & Insider Ownership

84.3% of H2O America shares are held by institutional investors. Comparatively, 44.0% of Pennon Group shares are held by institutional investors. 0.4% of H2O America shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Valuation and Earnings

This table compares H2O America and Pennon Group”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
H2O America	$748.44 million	2.40	$93.97 million	$3.05	16.71
Pennon Group	N/A	N/A	N/A	$0.2902	22.06

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

Dividends

H2O America pays an annual dividend of $1.68 per share and has a dividend yield of 3.3%. Pennon Group pays an annual dividend of $0.3031 per share and has a dividend yield of 4.7%. H2O America pays out 55.1% of its earnings in the form of a dividend. Pennon Group pays out 104.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. H2O America has raised its dividend for 57 consecutive years.

Profitability

This table compares H2O America and Pennon Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
H2O America	13.03%	7.67%	2.27%
Pennon Group	N/A	N/A	N/A

Analyst Ratings

This is a breakdown of current ratings for H2O America and Pennon Group, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
H2O America	0	1	1	0	2.50
Pennon Group	0	0	2	0	3.00

H2O America presently has a consensus price target of $56.50, suggesting a potential upside of 10.83%. Given H2O America’s higher probable upside, equities analysts clearly believe H2O America is more favorable than Pennon Group.

Summary

H2O America beats Pennon Group on 10 of the 14 factors compared between the two stocks.

About H2O America

SJW Group, through its subsidiaries, provides water utility and other related services in the United States. It operates in Water Utility Services and Real Estate Services segments. The company engages in the production, purchase, storage, purification, distribution, wholesale, and retail sale of water and wastewater services; and supplies groundwater from wells, surface water from watershed run-off and diversion, reclaimed water, and imported water purchased from the Santa Clara Valley Water District. It also offers non-tariffed services, including water system operations, maintenance agreements, and antenna site leases; contracted services, sewer operations, and other water related services to water utilities; and a Linebacker protection plan for public drinking water customers in Connecticut and Maine. In addition, the company provides water service to approximately 232,400 connections that serve approximately one million people residing in portions of the cities of San Jose and Cupertino and in the cities of Campbell, Monte Sereno, Saratoga, and the Town of Los Gatos; adjacent unincorporated territories in the County of Santa Clara in the State of California; water service to approximately 141,000 service connections, which serve approximately 461,000 people in 81 municipalities with a service area of approximately 272 square miles in Connecticut and Maine and approximately 3,000 wastewater connections in Southbury, Connecticut; approximately 28,000 service connections that serve approximately 83,000 people in a service area comprising approximately 271 square miles in the region between San Antonio and Austin, Texas; and approximately 950 wastewater connections. Further, it owns undeveloped land in California and Tennessee; commercial and warehouse properties in Tennessee; and commercial properties and parcels of land in Connecticut. The company was formerly known as SJW Corp. and changed its name to SJW Group in November 2016. SJW Group was incorporated in 1985 and is headquartered in San Jose, California.

About Pennon Group

Pennon Group Plc provides clean water and wastewater services in the United Kingdom. It provides water and wastewater services for customers in Cornwall, Devon, and parts of Dorset and Somerset; water-only services in the areas of Dorset, Hampshire, and Wiltshire; and water and wastewater retail services to non-household customers in Great Britain. The company also offers regulated water to approximately 1.2 million customers in the Bristol region. Pennon Group Plc was incorporated in 1989 and is based in Exeter, the United Kingdom.