Reasons to Add Consolidated Water (CWCO) to Your Portfolio Now
Consolidated Water Co. Ltd.’s CWCO use of Reverse Osmosis, one of the most advanced water purification technologies to convert seawater to potable water at all water treatment plants, boosts its performance. The return of tourism to the Cayman Islands is expected to drive the company’s earnings. Given its growth opportunities, Consolidated Water makes for a solid investment option in the utility sector.
Let’s focus on the factors that make this Zacks #1 Rank (Strong Buy) stock a strong investment pick at the moment.
Growth Projections & Long-Term Growth
The Zacks Consensus Estimate for CWCO’s 2023 earnings per share (EPS) has moved up 50.5% in the past 60 days to $1.46.
The consensus mark for 2023 sales is pinned at $144.13 million, implying year-over-year growth of 53.2%.
Consolidated Water’s long-term (three to five years) earnings growth rate is 8%.
Return on Equity
Return on equity (ROE) indicates how efficiently a company has been utilizing the funds to generate returns. Currently, the company’s ROE is 8.9%, higher than the sector’s average of 6.1%. This indicates that the company has been utilizing the funds more constructively than its peers in the utility sector.
Debt Position & Liquidity
At the end of second-quarter 2023, Consolidated Water’s total debt to capital was 0.16%, much better than the industry’s average of 48.22%.
The current ratio at the end of the second quarter was 3.72, much higher than the industry’s average of 0.94. The ratio, being greater than one, indicates the company’s ability to meet its future short-term liabilities without difficulties.
Dividend History
Consolidated Water has been consistently paying dividends since 1997 and increasing shareholders’ value. In August 2023, its board of directors approved a quarterly dividend of 9.5 cents per share, 11.8% higher than the previous quarter’s level of 8.5 cents. This increase resulted in an annualized dividend of 38 cents per share. The company paid a total dividend of $2.64 million in the first half of 2023. Its current dividend yield is 1.13%.
Price Performance
In the past month, CWCO returned 19.5% compared with the industry’s average 1.1% growth.
Image Source: Zacks Investment Research
Other Stocks to Consider
A few other top-ranked stocks from the same industry are American Water Works AWK, American States Water AWR and SJW Group SJW, each holding a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
AWK’s long-term earnings growth rate is 8.18%. The Zacks Consensus Estimate for 2023 EPS is pegged at $4.80, indicating a year-over-year improvement of 6.4%.
AWR’s long-term earnings growth rate is 6.3%. The consensus mark for 2023 EPS is pinned at $2.96, indicating year-over-year growth of 29.8%.
The consensus estimate for SJW’s 2023 EPS is pegged at $2.47, implying a year-over-year increase of 2.1%. The company delivered an average earnings surprise of 21% in the last four quarters.
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