Reasons to Add California Water (CWT) to Your Portfolio Now
California Water Service Group’s CWT investments in infrastructure and efficient services are expected to help expand its customer base. The company is expanding its operations through acquisitions and regulated and non-regulated activities that will further drive its performance. Given its growth opportunities, CWT makes for a solid investment option in the utility sector.
Let’s focus on the factors that make this currently Zacks Rank #2 (Buy) company a strong investment pick at the moment.
Growth Projections
The Zacks Consensus Estimate for 2024 earnings per share (EPS) has moved up 3.7% in the past 90 days to $2.25.
The Zacks Consensus Estimate for 2024 sales is pinned at $885.1 million, indicating year-over-year growth of 3.2%.
Debt Position
Currently, California Water’s total debt to capital is 45.23%, better than the industry’s average of 47.49%.
The time to interest earned ratio at the end of third-quarter 2023 was 1.8. The ratio, being greater than one, reflects California Water’s ability to meet future debt 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 inception of the payment. In October 2023, the company’s board of directors declared a quarterly dividend of 26 cents per share, resulting in an annualized dividend of $1.04 per share.
This marks the company’s 315th consecutive quarterly dividend. On a long-term basis, California Water targets to achieve a dividend payout ratio of 60%. Currently, its dividend yield is 2.08%, better than the Zacks S&P 500 Composite’s yield of 1.39%.
Systematic Investments
The company’s systematic investment plans in infrastructure will help it further provide customers with efficient water and wastewater services. The company invested $274.1 million in capital improvements during the first nine months of 2023, up 23.4% year over year. The estimated capital expenditure for 2023 and 2024 is pinned at $360 million and $365 million, respectively. The company expects to increase capital expenditures in non-California utilities in 2023, owing to recent acquisitions and expansions.
Price Performance
In the past six months, shares of California Water have lost 0.9% compared with the industry’s 36.2% decline.
Image Source: Zacks Investment Research
Other Stocks to Consider
A few other top-ranked stocks from the same industry are Consolidated Water Co. Ltd. CWCO, sporting a Zacks Rank #1 (Strong Buy), and American Water Works AWK and Essential Utilities WTRG, both carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
CWCO’s long-term (three to five years) earnings growth rate is 8%. The company delivered an average earnings surprise of 61.6% in the last four quarters.
AWK’s long-term earnings growth rate is 7.76%. The Zacks Consensus Estimate for 2024 EPS is pegged at $5.16, implying a year-over-year increase of 6.8%.
WTRG’s long-term earnings growth rate is 5.6%. The Zacks Consensus Estimate for 2024 EPS is pinned at $2.00, implying a year-over-year improvement of 7.4%.
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American Water Works Company, Inc. (AWK) : Free Stock Analysis Report
California Water Service Group (CWT) : Free Stock Analysis Report
Consolidated Water Co. Ltd. (CWCO) : Free Stock Analysis Report
Essential Utilities Inc. (WTRG) : Free Stock Analysis Report
