California Water Service (CWT) AI Stock Analysis

• Market Cap: $2.97B
• Dividend Yield: 2.29%
• Average Volume (3M): 420.48K
• Price to Earnings (P/E): 21.5
• Beta (1Y): 0.30
• Revenue Growth: 3.83%
• EPS Growth: -8.75%
• Country: US
• Employees: 1,278
• Sector: Utilities
• Sector Strength: 91
• Industry: Regulated Water
• EPS (TTM): 0.22
• Shares Outstanding: 59,570,140
• 10 Day Avg. Volume: 426,131
• 30 Day Avg. Volume: 420,479
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.00
• Price to Cash Flow (P/CF): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: 1.44
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: 4.31
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $57.67
• Price Target Upside: 18.83% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 3

CWT shows financial stability with strong profitability and revenue growth, though its net profit margin and free cash flow suggest areas needing improvement. Technical indicators point to moderate upward momentum without overbought conditions. Despite a solid dividend yield, the high P/E ratio implies potential overvaluation. The earnings call reflects strong performance and significant investments but warns of regulatory challenges and declining GAAP metrics.

California Water Service Business Overview & Revenue Model

Company Description

California Water Service Group, through its subsidiaries, provides water utility and other related services in California, Washington, New Mexico, Hawaii, and Texas. The company is involved in the production, purchase, storage, treatment, testing, distribution, and sale of water for domestic, industrial, public, and irrigation uses, as well as for fire protection. It offers its services to approximately 494,500 customer connections in 100 California communities; approximately 6,200 water and wastewater customer connections on the islands of Maui and Hawaii; approximately 36,400 customer connections in the Tacoma, Olympia, Graham, Spanaway, Puyallup, and Gig Harbor areas; and approximately 8,600 water and wastewater customer connections in the Belen, Los Lunas, Indian Hills, and Elephant Butte areas in New Mexico. The company also engages in the provision of non-regulated water-related services, including operating of municipally owned water systems, privately owned water, and recycled water distribution systems; water system operation, meter reading, and billing services to private companies and municipalities; leasing of communication antenna sites on its properties to telecommunication companies; and billing of optional third-party insurance programs to its residential customers, as well as provides lab services. In addition, it offers wastewater collection and treatment services. The company was founded in 1926 and is headquartered in San Jose, California.

How the Company Makes Money

California Water Service makes money through the provision of regulated water utility services. The company generates revenue primarily from water usage charges billed to residential, commercial, and industrial customers. These charges are regulated by state public utility commissions, which approve rates that allow the company to recover costs and earn a reasonable return on investments in infrastructure. Additional revenue streams include wastewater services and other fees for services such as water connections, late payments, and infrastructure maintenance. The company may also engage in partnerships or programs to promote water conservation and efficiency, potentially receiving incentives or funding for such initiatives from government or environmental organizations.

California Water Service Financial Statement Overview

Summary

California Water Service demonstrates financial stability with consistent revenue growth and strong profitability margins. The company has improved leverage ratios and maintains a strong equity base. However, the decline in net profit margin and negative free cash flow indicate potential areas for improvement.

Income Statement

California Water Service shows a stable income statement with a consistent gross profit margin of approximately 61.8% in TTM (Trailing-Twelve-Months). However, the net profit margin decreased to 13.8% from 18.4% in the previous year. Revenue growth is evident with a 21.9% increase from 2023 to 2024, but the recent TTM figure indicates a slight decline. EBIT and EBITDA margins are healthy at 18.4% and 35.5% respectively, suggesting operational efficiency.

Balance Sheet

The balance sheet reflects a strong equity base with an equity ratio of 31.0% in TTM. The debt-to-equity ratio has significantly improved to 0.04, indicating reduced leverage. Return on equity (ROE) is robust at 8.2% for TTM, although slightly lower than the previous year. The company maintains a conservative financial structure, minimizing risks associated with high leverage.

Cash Flow

Cash flow analysis reveals challenges in free cash flow management, with a free cash flow of -$58.2 million in TTM, though improved from the previous period. The operating cash flow to net income ratio stands at 2.26, signifying a strong operational cash generation capability. However, the free cash flow to net income ratio remains negative, indicating the need for better capital expenditure management.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
1.04B	794.63M	846.43M	790.91M	794.31M
	Gross Profit
989.12M	363.38M	529.45M	483.84M	489.55M
	EBIT
225.05M	77.14M	127.66M	126.17M	136.67M
	EBITDA
424.26M	217.54M	262.72M	250.83M	244.00M
	Net Income Common Stockholders
190.81M	51.91M	96.01M	101.13M	96.83M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
50.12M	39.59M	62.10M	78.38M	44.55M
	Total Assets
5.18B	4.60B	3.85B	3.62B	3.39B
	Total Debt
1.38B	1.25B	1.13B	1.10B	1.16B
	Net Debt
1.33B	1.21B	1.06B	1.02B	1.11B
	Total Liabilities
3.54B	3.17B	2.53B	2.44B	2.47B
	Stockholders Equity
1.64B	1.43B	1.32B	1.18B	921.34M
Cash Flow		Free Cash Flow
-179.93M	-165.93M	-83.98M	-61.48M	-180.73M
	Operating Cash Flow
290.87M	217.82M	243.77M	231.72M	117.92M
	Investing Cash Flow
-474.87M	-389.42M	-335.52M	-300.87M	-346.07M
	Financing Cash Flow
194.72M	171.54M	96.12M	104.68M	229.98M

California Water Service Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 48.53
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CWT, the sentiment is Neutral. The current price of 48.53 is below the 20-day moving average (MA) of 50.01, above the 50-day MA of 48.26, and below the 200-day MA of 49.25, indicating a neutral trend. The MACD of 0.24 indicates Positive momentum. The RSI at 45.63 is Neutral, neither overbought nor oversold. The STOCH value of 26.26 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for CWT.

California Water Service Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ARTNA	76 Outperform	$359.51M	16.48	9.04%	3.41%	8.31%	21.97%
MSEX	72 Outperform	$1.10B	24.95	9.80%	2.17%	16.02%	18.29%
AWR	69 Neutral	$3.11B	25.22	14.01%	2.26%	-0.04%	-5.82%
CWT	66 Neutral	$2.97B	21.50	8.67%	2.29%	3.83%	-8.75%
Sector *	63 Neutral	$8.52B	11.01	5.35%	4.37%	3.39%	-11.87%
YORW	54 Neutral	$504.64M	25.34	8.63%	2.45%	3.45%	-19.90%

California Water Service Corporate Events

California Water Service Granted Extension on Capital Filing

On January 14, 2025, the California Public Utilities Commission granted California Water Service Company and three other Class A water companies a one-year extension on their cost of capital filing deadline to May 1, 2026. This decision allows the Water Cost of Capital Mechanisms to remain in effect during the extension, impacting operational planning and financial strategies for the involved companies.