Reasons to Add Global Water Resources (GWRS) to Your Portfolio Now
Global Water Resources Inc.’s GWRS significant progress in expanding operations through organic means and acquisitions is expected to further drive its performance. Given its growth opportunities, GWRS makes for a solid investment option in the utility sector.
Let’s focus on the factors that make this Zacks Rank #2 (Buy) company a strong investment pick at the moment.
Growth Projections & Surprise History
The Zacks Consensus Estimate for 2023 earnings per share (EPS) has moved up 7.4% in the past 30 days to 29 cents.
The consensus estimate for 2023 revenues is pegged at $51.85 million, indicating year-over-year growth of 15.9%.
GWRS’ long-term (three-to-five years) earnings growth rate is 15%. The company delivered an average earnings surprise of 27.1% in the last four quarters.
Solvency
The times interest earned ratio is a solvency ratio. It is used to measure how well the company can cover its interest obligations. The time-to-interest earned ratio at the end of third-quarter 2023 was 3.3, which being greater than one indicates that GWRS is in a good position to meet its interest obligations.
Dividend History
GWRS has consistently increased the value of its stockholders by paying dividends. Currently, its monthly cash dividend is 2.508 cents per share, resulting in an annualized dividend of 30.096 cents per share. The company’s current dividend yield is 2.27%, better than its industry average of 2.1%.
Business Growth
The company expects to increase its long-term investments in existing utilities to increase revenues, reduce expenses and build a rate base to provide safe and reliable service. During the third quarter of 2023, the company invested $4.9 million in infrastructure projects to support existing utilities and continued growth.
The improving economic condition in Arizona resulted in a growing customer base and fresh demand for GWRS’ services. The company has invested $49.7 billion of capital in Arizona for the years 2020 through 2022, which indicates an increase of 588% over the preceding three years.
Return on Equity
Return on Equity (ROE) indicates how efficiently a company has been utilizing the funds to generate higher returns. Currently, Global Water Resources’ ROE is 12.6%, higher than the industry’s average of 9.32%. This indicates that the company has been utilizing the funds more constructively than its peers in the water supply utility industry.
Price Performance
In the last three months, the GWRS stock returned 36.2% compared with the industry’s 14.1% growth.
Image Source: Zacks Investment Research
Other Stocks to Consider
Some other top-ranked stocks in the same industry are American Water Works AWK, SJW Group SJW and The York Water Company YORW, each carrying a Zacks Rank of 2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
American Water Works, SJW Group and The York Water’s last four-quarter average earnings surprise is 6.5%, 20.05% and 6.72%, respectively.
The Zacks Consensus Estimate for AWK, SJW and YORW’s 2023 EPS implies year-over-year growth of 7.1%, 11.2% and 13.57%, respectively.
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The York Water Company (YORW) : Free Stock Analysis Report
American Water Works Company, Inc. (AWK) : Free Stock Analysis Report
SJW Group (SJW) : Free Stock Analysis Report
Global Water Resources, Inc. (GWRS) : Free Stock Analysis Report
