The Prudent Investor

A Quick Look at Middlesex Water
January 16, 2007, 9:27 am
Filed under: Water Utilities

Starting the second half of our examination is Middlesex Water (NASDAQ:MSEX), with a market cap of $220 Million.

Yahoo Finance offers the following description:

Middlesex Water Company, through its subsidiaries, provides water, wastewater, and related services in New Jersey and Delaware. It owns and operates regulated water utility systems and regulated wastewater utility systems, as well as operates water and wastewater systems on behalf of others in New Jersey and Delaware. Middlesex provides water services to approximately 58,500 retail customers in eastern Middlesex County, New Jersey, as well as offers water under wholesale contracts to the Township of Edison, the Boroughs of Highland Park and Sayreville, and both the Old Bridge and the Marlboro Township Municipal Utilities Authorities. It treats, stores, and distributes water for residential, commercial, industrial, and fire prevention purposes. The company also provides contract operations services and a service line maintenance program. In addition, it offers water treatment and pumping services to the Township of East Brunswick.

With a current price of $18.85, the P/E of 22 is one of the lowest in the group. The PEG of 5.6 is indeed high and something to consider, but a P/S of 2.7, is significantly lower than the industry’s 3.6. Quarterly Revenue Growth of 8.6% is the second highest in the group, and the Dividend Yield of 3.6% is also the second highest in the group. A Debt/Equity at 1.4 is a bit higher than we would like to see and is something we will need to examine more closely.

The 2006 chart shows the price maintaining a bounce between $18 and $19, with a single large jump down and up in the middle of the year.

The numbers are positive, but we will need to consider the debt as we move along. This company remains in the running.


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