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Reasons to Add California Water (CWT) to Your Portfolio Now
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California Water Service Group’s (CWT - Free Report) strategic infrastructure investments and efficient services are expected to boost its earnings performance. The company is also gaining from expanding its operations through acquisitions. Given its growth opportunities, CWT makes for a solid investment option in the utility sector.
Let’s focus on the factors that make this Zacks Rank #1 (Strong Buy) company a strong investment pick at the moment.
Growth Projections & Surprise History
The Zacks Consensus Estimate for CWT’s 2024 earnings per share (EPS) has moved up 40% in the past 60 days to $3.15.
The Zacks Consensus Estimate for 2024 revenues is pegged at $951.5 million, which indicates year-over-year growth of 19.7%.
The company delivered an average earnings surprise of 85.16% in the last four quarters.
Return on Equity
Return on equity (ROE) indicates how efficiently a company has been utilizing the funds to generate returns. Currently, California Water’s ROE is 10.09%, higher than the sector’s average of 9.5%. This indicates that the company has been utilizing the funds more constructively than its peers in the utility sector.
Debt Position
Currently, California Water’s total debt to capital is 47.55%, better than the industry’s average of 48.91%.
Its time-to-interest earned ratio at the end of the first quarter of 2024 was 3.2. The ratio, being greater than one, reflects CWT’s ability to meet future interest obligations without difficulties.
Dividend History
The utility company has been consistently paying dividends to its shareholders. It has been increasing dividends every year since the initiation of its dividend payment. Currently, its quarterly dividend is 28 cents per share, resulting in an annualized dividend of $1.12 per share.
This marks its 317th consecutive quarterly dividend. On a long-term basis, California Water aims to achieve a dividend payout ratio of 60%. Currently, its dividend yield is 2.34%, better than the Zacks S&P 500 composite’s 1.28%.
Systematic Investments & Acquisitions
California Water’s systematic investment plans in infrastructure should help it further provide its customers with efficient water and wastewater services. In the first quarter of 2024, the company made capital investments of $109.8 million, up 34% year over year. The estimated capital expenditure for 2024 is $380 million.
The company also benefits from its acquisition spree. Evidently, in January 2024, CWT acquired the assets of HOH Utilities and Monterey Water Company. The acquisition of HOH Utilities’ wastewater system assets added 1,800 residential, commercial and resort customers, while that of the Monterey water system added 380 residential customers.
Price Performance
In the past three months, shares of California Water have risen 3.1% compared with the industry’s 2.5% growth.
CNP’s long-term (three to five years) earnings growth rate is 7%. The Zacks Consensus Estimate for CenterPoint’s 2024 sales implies a year-over-year increase of 1%.
ED’s long-term earnings growth rate is 7.4%. The Zacks Consensus Estimate for its 2024 sales implies a year-over-year increase of 3.1%.
ES’ long-term earnings growth rate is 5.4%. The Zacks Consensus Estimate for Eversource’s 2024 sales calls for a year-over-year improvement of 7.8%.
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Reasons to Add California Water (CWT) to Your Portfolio Now
California Water Service Group’s (CWT - Free Report) strategic infrastructure investments and efficient services are expected to boost its earnings performance. The company is also gaining from expanding its operations through acquisitions. Given its growth opportunities, CWT makes for a solid investment option in the utility sector.
Let’s focus on the factors that make this Zacks Rank #1 (Strong Buy) company a strong investment pick at the moment.
Growth Projections & Surprise History
The Zacks Consensus Estimate for CWT’s 2024 earnings per share (EPS) has moved up 40% in the past 60 days to $3.15.
The Zacks Consensus Estimate for 2024 revenues is pegged at $951.5 million, which indicates year-over-year growth of 19.7%.
The company delivered an average earnings surprise of 85.16% in the last four quarters.
Return on Equity
Return on equity (ROE) indicates how efficiently a company has been utilizing the funds to generate returns. Currently, California Water’s ROE is 10.09%, higher than the sector’s average of 9.5%. This indicates that the company has been utilizing the funds more constructively than its peers in the utility sector.
Debt Position
Currently, California Water’s total debt to capital is 47.55%, better than the industry’s average of 48.91%.
Its time-to-interest earned ratio at the end of the first quarter of 2024 was 3.2. The ratio, being greater than one, reflects CWT’s ability to meet future interest obligations without difficulties.
Dividend History
The utility company has been consistently paying dividends to its shareholders. It has been increasing dividends every year since the initiation of its dividend payment. Currently, its quarterly dividend is 28 cents per share, resulting in an annualized dividend of $1.12 per share.
This marks its 317th consecutive quarterly dividend. On a long-term basis, California Water aims to achieve a dividend payout ratio of 60%. Currently, its dividend yield is 2.34%, better than the Zacks S&P 500 composite’s 1.28%.
Systematic Investments & Acquisitions
California Water’s systematic investment plans in infrastructure should help it further provide its customers with efficient water and wastewater services. In the first quarter of 2024, the company made capital investments of $109.8 million, up 34% year over year. The estimated capital expenditure for 2024 is $380 million.
The company also benefits from its acquisition spree. Evidently, in January 2024, CWT acquired the assets of HOH Utilities and Monterey Water Company. The acquisition of HOH Utilities’ wastewater system assets added 1,800 residential, commercial and resort customers, while that of the Monterey water system added 380 residential customers.
Price Performance
In the past three months, shares of California Water have risen 3.1% compared with the industry’s 2.5% growth.
Image Source: Zacks Investment Research
Other Stocks to Consider
A few other top-ranked stocks from the same sector are CenterPoint Energy (CNP - Free Report) , Consolidated Edison (ED - Free Report) and Eversource Energy (ES - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
CNP’s long-term (three to five years) earnings growth rate is 7%. The Zacks Consensus Estimate for CenterPoint’s 2024 sales implies a year-over-year increase of 1%.
ED’s long-term earnings growth rate is 7.4%. The Zacks Consensus Estimate for its 2024 sales implies a year-over-year increase of 3.1%.
ES’ long-term earnings growth rate is 5.4%. The Zacks Consensus Estimate for Eversource’s 2024 sales calls for a year-over-year improvement of 7.8%.