Contrasting H2O Innovation (OTCMKTS:HEOFF) and Essential Utilities (NYSE:WTRG)

H2O Innovation (OTCMKTS:HEOFF) and Essential Utilities (NYSE:WTRG) are both industrial products companies, but which is the superior business? We will contrast the two companies based on the strength of their risk, dividends, profitability, valuation, institutional ownership, earnings and analyst recommendations.

Volatility & Risk

H2O Innovation has a beta of 0.63, indicating that its stock price is 37% less volatile than the S&P 500. Comparatively, Essential Utilities has a beta of 0.78, indicating that its stock price is 22% less volatile than the S&P 500.

Profitability

This table compares H2O Innovation and Essential Utilities’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
H2O Innovation	1.46%	9.46%	4.48%
Essential Utilities	20.25%	8.54%	2.96%

Earnings & Valuation

This table compares H2O Innovation and Essential Utilities’ top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
H2O Innovation	$145.66 million	1.25	$4.03 million	$0.03	67.69
Essential Utilities	$2.29 billion	4.36	$465.24 million	$1.76	21.42

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

Analyst Recommendations

This is a breakdown of current recommendations and price targets for H2O Innovation and Essential Utilities, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
H2O Innovation	0	0	0	0	N/A
Essential Utilities	0	1	3	0	2.75

H2O Innovation currently has a consensus price target of $3.25, suggesting a potential upside of 60.10%. Essential Utilities has a consensus price target of $51.25, suggesting a potential upside of 35.94%. Given H2O Innovation’s higher possible upside, equities analysts plainly believe H2O Innovation is more favorable than Essential Utilities.

Insider & Institutional Ownership

73.0% of Essential Utilities shares are owned by institutional investors. 4.9% of H2O Innovation shares are owned by company insiders. Comparatively, 0.2% of Essential Utilities shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Summary

Essential Utilities beats H2O Innovation on 8 of the 13 factors compared between the two stocks.

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; and the flexMBR for wastewater treatment systems. The company also offers specialty chemicals, consumables, and specialized products for the water industry, including reverse osmosis (RO) membrane chemicals, such as antiscalants, flocculants, biocides, and cleaning chemicals; corrosion resistant equipment for desalination plants; flexible grooved-end couplings, fiberglass reinforced polyester (FRP) cartridge filter housings, self-cleaning disc and screen filters, bag filters, cartridges, and strainers; and maple equipment and products. In addition, it operates, maintains, and repairs water and wastewater treatment systems, distribution equipment, and associated assets. The company was founded in 2000 and is headquartered in Quebec City, Canada.

About Essential Utilities

Essential Utilities, Inc., through its subsidiaries, operates regulated utilities that provide water, wastewater, or natural gas services in the United States. The company operates through Regulated Water and Regulated Natural Gas segments. It offers water services through operating and maintenance contract with municipal authorities and other parties. The company also provides non-utility raw water supply services for firms in the natural gas drilling industry; and water and sewer line protection solutions, and repair services to households. It serves approximately 8.8 million residential water, commercial water, fire protection, industrial water, wastewater, and other water and utility customers in Pennsylvania, Ohio, Texas, Illinois, North Carolina, New Jersey, Indiana, Virginia, West Virginia, and Kentucky under the Aqua and Peoples brands. The company was formerly known as Aqua America, Inc. and changed its name to Essential Utilities, Inc. in February 2020. Essential Utilities, Inc. was founded in 1886 and is headquartered in Bryn Mawr, Pennsylvania.