Critical Review: York Water (NASDAQ:YORW) and Pennon Group (OTCMKTS:PEGRF)

Pennon Group (OTCMKTS:PEGRF) and York Water (NASDAQ:YORW) are both utilities companies, but which is the better business? We will contrast the two businesses based on the strength of their valuation, dividends, profitability, earnings, analyst recommendations, risk and institutional ownership.

Dividends

Pennon Group pays an annual dividend of $0.30 per share and has a dividend yield of 3.6%. York Water pays an annual dividend of $0.84 per share and has a dividend yield of 2.2%. 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. York Water pays out 49.4% of its earnings in the form of a dividend. York Water has raised its dividend for 26 consecutive years.

Insider & Institutional Ownership

44.0% of Pennon Group shares are held by institutional investors. Comparatively, 49.9% of York Water shares are held by institutional investors. 1.3% of York Water shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Pennon Group and York Water, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Pennon Group	0	0	0	0	N/A
York Water	0	0	0	0	N/A

Earnings and Valuation

This table compares Pennon Group and York Water”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Pennon Group	N/A	N/A	N/A	$0.29	29.19
York Water	$73.24 million	7.33	$23.76 million	$1.70	22.02

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Pennon Group	N/A	N/A	N/A
York Water	31.27%	10.32%	3.88%

Summary

York Water beats Pennon Group on 9 of the 11 factors compared between the two stocks.

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.

About York Water

The York Water Company impounds, purifies, and distributes drinking water. It owns and operates three wastewater collection systems; ten wastewater collection and treatment systems; and two reservoirs, including Lake Williams and Lake Redman, which hold approximately 2.2 billion gallons of water. The company also operates a 15-mile pipeline from the Susquehanna River to Lake Redman; and owns satellite groundwater systems in York, Adams, and Lancaster Counties, as well as two impounding dams on primary system located in York and Springfield Townships. It serves customers in the fixtures and furniture, electrical machinery, food products, paper, ordnance units, textile products, air conditioning systems, laundry detergents, barbells, and motorcycle industries in 56 municipalities within four counties in south-central Pennsylvania. The York Water Company was incorporated in 1816 and is based in York, Pennsylvania.