Middlesex Water Co (NASDAQ: MSEX)

Sector: Utilities Industry: Utilities - Regulated Water CIK: 0000066004
Market Cap 985.23 Mn
P/B 2.15
P/E 22.76
P/S 5.03
ROIC (Qtr) 5.50
Div Yield % 3.09
Rev 1y % (Qtr) -1.83
Total Debt (Qtr) 414.76 Mn
Debt/Equity (Qtr) 0.86
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About

Investment thesis

Bull case

  • Strong tangible asset base of 1.34B provides 3.24x coverage of total debt 414.75M, indicating robust asset backing and low credit risk.
  • Operating cash flow of 65.53M provides strong 45.86x coverage of stock compensation 1.43M, indicating sustainable incentive practices.
  • Tangible assets of 1.34B provide exceptional 896.43x coverage of deferred revenue 1.50M, showing strong service capability backing.
  • Operating cash flow of 65.53M provides strong 43.77x coverage of deferred revenue 1.50M, indicating service delivery capability.
  • Tangible assets of 1.34B provide robust 48.81x coverage of other current liabilities 27.49M, indicating strong asset backing.

Bear case

  • Operating cash flow of 65.53M barely covers its investment activities of (101.39M), with a coverage ratio of -0.65, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 65.53M provides thin coverage of dividend payments of (24.39M) with a -2.69 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • High receivables of 33.73M relative to inventory of 7.31M (4.61 ratio) suggests aggressive credit terms or collection difficulties, potentially masking revenue quality issues.
  • Free cash flow of (35.86M) provides weak coverage of capital expenditures of 101.39M, with a -0.35 ratio suggesting additional external financing needs for growth initiatives.
  • Operating earnings of 61.36M show weak coverage of depreciation charges of 31.80M, with a 1.93 ratio indicating high capital intensity and potential reinvestment needs.

Peer comparison

Companies in the Utilities - Regulated Water
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 AWK American Water Works Company, Inc. 24.13 Bn 37.82 6.54 15.37 Bn
2 WTRG Essential Utilities, Inc. 6.86 Bn 45.52 9.97 7.98 Bn
3 AWR American States Water Co 2.79 Bn 47.69 6.18 0.92 Bn
4 CWT California Water Service Group 2.22 Bn 43.86 3.64 1.52 Bn
5 HTO H2O America 1.79 Bn 19.00 2.39 1.90 Bn
6 MSEX Middlesex Water Co 0.99 Bn 22.76 5.03 0.41 Bn
7 CWCO Consolidated Water Co. Ltd. 0.54 Bn 88.40 10.18 0.00 Bn
8 YORW York Water Co 0.47 Bn 23.81 7.76 0.23 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.03 1.15
EV to Cash from Ops. EV/CFO 18.89 23.08
EV to Debt EV to Debt 3.32 18.00
EV to EBIT EV/EBIT 22.50 23.85
EV to EBITDA EV/EBITDA 16.41 16.61
EV to Free Cash Flow [EV/FCF] EV/FCF -48.88 -20.94
EV to Market Cap EV to Market Cap 1.40 1.32
EV to Revenue EV/Rev 7.04 9.58
Price to Book Value [P/B] P/B 2.15 4.93
Price to Earnings [P/E] P/E 22.76 38.23
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 1.75 0.89
Dividend Payout Ratio % Div Payout % (Qtr) 56.90 56.90
Dividend per Basic Share Div per Share (Qtr) 1.36 1.13
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) -68.72 -14.77
Interest Coverage Int. cover (Qtr) 4.43 279.41
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -52.27 -66.90
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -20.26 15.05
Dividend Growth (1y) % Div 1y % (Qtr) 4.62 6.56
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 3.07 -2.63
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 8.92 0.44
EBIT Growth (1y) % EBIT 1y % (Qtr) -1.21 -4.60
EBT Growth (1y) % EBT 1y % (Qtr) -0.18 -5.63
EPS Growth (1y) % EPS 1y % (Qtr) 3.46 -4.34
FCF Growth (1y) % FCF 1y % (Qtr) -117.95 -313.21
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 6.23 349.72
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.15 0.18
Cash Payout Ratio Cash Payout (Qtr) 0.15 0.04
Cash Ratio Cash Ratio (Qtr) 0.04 0.68
Current Ratio Curr Ratio (Qtr) 0.42 1.38
Debt to Equity Ratio Debt/Equity (Qtr) 0.86 1.08
Interest Cover Ratio Int Coverage (Qtr) 4.43 279.41
Times Interest Earned Times Interest Earned (Qtr) 4.43 279.41
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 47.80 31.76
EBIT Margin % EBIT Margin % (Qtr) 31.50 17.86
EBT Margin % EBT Margin % (Qtr) 24.39 6.26
Gross Margin % Gross Margin % (Qtr) 41.20 53.31
Net Profit Margin % Net Margin % (Qtr) 22.00 2.23