Investors in New Jersey water utility stock Middlesex Water (MSEX 14.59%) woke up to some dramatically good news on Monday morning: a 12.8% gain in share price (through 10:25 a.m. ET) after earnings came out over the weekend.

As The Fly reports, Middlesex reported its Q4 earnings after trading already closed for the day Friday, meaning today is the first chance investors have to trade on the news. And they're wasting no time doing just that: Middlesex was expected to earn only $0.37 per share for the quarter, but reported profit of $0.49 per share instead, so investors are buying the stock hand over fist.

Middlesex's Q4 earnings

Middlesex credited a rate increase, as well as "weather-driven customer demand," for driving a 22% increase in Q4 revenue and a 53% increase in quarterly profit. For the full year, the news was also good. Revenue climbed 15% year over year in 2024, and profits were up 40% to $2.47 per share.

Over the course of the year, Middlesex says it also benefited from a "one-time recovery of previously incurred depreciation, operating, and carrying costs of $6.0 million."

Is Middlesex stock a buy?

As a small-cap utility stock valued at just $1 billion, Middlesex doesn't get much coverage on Wall Street -- but perhaps it should.

After today's share price increase, Middlesex stock costs a reasonable 23.5 times trailing earnings, and pays a modest 2.7% dividend yield. That's about twice the average dividend yield for S&P 500 (^GSPC -0.26%) stocks, on a P/E ratio that's 20% cheaper than average.

But what about the growth rate? Well, 40% growth in 2024 profits is fantastic. Driven by a single rate increase, though, it probably can't be depended upon to repeat. In fact, the few analysts who follow Middlesex agree a 14% long-term earnings growth rate is more likely.

If, between earnings growth and dividend yield, you assume Middlesex will produce a total annual return of about 17%, a 23.5 P/E ratio gives you about a 1.4x total return ratio on the stock. Not cheap, but not very expensive either.