American States Water (NYSE:AWR) and Pure Cycle (NASDAQ:PCYO) Critical Review

American States Water (NYSE:AWR) and Pure Cycle (NASDAQ:PCYO) are both utilities companies, but which is the better business? We will contrast the two businesses based on the strength of their institutional ownership, risk, earnings, valuation, profitability, analyst recommendations and dividends.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
American States Water	20.39%	13.39%	5.26%
Pure Cycle	43.66%	9.98%	8.75%

Analyst Ratings

This is a summary of recent ratings and target prices for American States Water and Pure Cycle, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
American States Water	0	2	1	0	2.33
Pure Cycle	0	1	0	0	2.00

Valuation & Earnings

This table compares American States Water and Pure Cycle”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
American States Water	$658.07 million	5.42	$130.44 million	$3.65	24.65
Pure Cycle	$26.09 million	10.07	$13.11 million	$0.61	17.88

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

Institutional & Insider Ownership

75.2% of American States Water shares are held by institutional investors. Comparatively, 51.4% of Pure Cycle shares are held by institutional investors. 0.9% of American States Water shares are held by company insiders. Comparatively, 6.1% of Pure Cycle shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Risk and Volatility

American States Water has a beta of 0.54, meaning that its share price is 46% less volatile than the S&P 500. Comparatively, Pure Cycle has a beta of 1.16, meaning that its share price is 16% more volatile than the S&P 500.

Summary

American States Water beats Pure Cycle on 8 of the 13 factors compared between the two stocks.

About American States Water

American States Water Company, through its subsidiaries, provides water and electric services to residential, commercial, industrial, and other customers in the United States. It operates through three segments: Water, Electric, and Contracted Services. The company purchases, produces, distributes, and sells water, as well as distributes electricity. As of December 31, 2022, American States Water Company provided water service to 263,265 customers located throughout 10 counties in the State of California; and distributed electricity to 24,705 customers in San Bernardino County mountain communities in California. The company also provides water and/or wastewater services, including the operation, maintenance, and construction of facilities at the water and/or wastewater systems at various military installations. American States Water Company was incorporated in 1929 and is headquartered in San Dimas, California.

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.