Is Middlesex Water Co. overvalued or undervalued?

As of 19 September 2025, the valuation grade for Middlesex Water Co. has moved from very expensive to expensive, indicating a slight improvement in its valuation outlook. Despite this change, the company remains overvalued based on its current metrics. The P/E ratio stands at 23, which is higher than the peer average of 22.05 for companies in similar sectors, while the EV to EBITDA ratio of 16.44 also exceeds the industry average of 14.36. Additionally, the PEG ratio of 1.26 suggests that the stock may not be priced favorably relative to its growth prospects.
In comparison to its peers, Essential Utilities, Inc. shows a more attractive P/E of 16.89, while American States Water Co. has a P/E of 22.76, indicating that Middlesex Water Co. is priced at a premium despite its lower return metrics, such as a ROCE of 6.52% and ROE of 9.57%. Furthermore, the stock has underperformed against the S&P 500 across multiple periods, with a year-to-date return of only 0.32% compared to the S&P 500's 13.31%, and a staggering three-year return of -39.85% versus 70.89% for the index. This underperformance reinforces the view that Middlesex Water Co. is overvalued in the current market.