Reasons to Add SJW Group (SJW) to Your Portfolio Right Now
SJW Group’s SJW strategic investments to strengthen its existing infrastructure and expand operations are expected to further drive its performance. The company’s initiatives for water and wastewater system acquisitions will continue to support its growth potential. Given its strong dividend history and growth opportunities, SJW Group makes for a solid investment option in the utility sector.
Let’s focus on the factors that make this Zacks Rank #2 (Buy) stock a strong investment option at the moment.
Growth Projections & Surprise History
The Zacks Consensus Estimate for 2023 earnings per share (EPS) is pegged at $2.47, implying a year-over-year increase of 2.1%.
The Zacks Consensus Estimate for 2023 revenues is pinned at $645.5 million, implying a year-over-year increase of 4%.
The company delivered an average earnings surprise of 21% in the last four quarters.
Return on Equity
Return on equity (ROE) indicates how efficiently a company has been utilizing the funds to generate higher returns. Currently, SJW Group’s ROE is 7.89%, higher than the sector’s average of 6.46%. This indicates that the company has been utilizing the funds more constructively than its peers in the utility sector.
Dividend Growth
SJW has been consistently paying dividends and increasing its shareholders’ value. In July 2023, SJW’s board of directors approved a quarterly dividend of 38 cents per share, resulting in an annualized dividend of $1.52 per share. Its current dividend yield is 2.26%, better than the Zacks S&P 500 Composite’s yield of 1.46%. At present, the company’s dividend payout is 53%.
Systematic Investments
SJW Group remains focused on investing in its operations and remaining actively engaged in its local communities. It plans to invest more than $1.6 billion over the next five years to build and maintain its water and wastewater operations. During the first six months of 2023, SJW invested $115.7 million in infrastructure and water supply, which is approximately 45% of $255 million budgeted in 2023.
Price Performance
In the last year, the stock returned 0.6% against the industry’s average 5.8% decline.
Image Source: Zacks Investment Research
Other Stocks to Consider
A few other top-ranked stocks from the same industry are American Water Works Company AWK, American States Water Company AWR and Essential Utilities WTRG, each holding a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
AWK’s long-term (three to five years) earnings growth rate is 8.18%. The company delivered an average earnings surprise of 7.1% in the last four quarters.
AWR’s long-term earnings growth is 6.3%. The Zacks Consensus Estimate for 2023 EPS is pegged at $2.96, implying a year-over-year improvement of 29.8%.
WTRG’s long-term earnings growth rate is 5.6%. The company delivered an average earnings surprise of 2.03% in the last four quarters.
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American Water Works Company, Inc. (AWK) : Free Stock Analysis Report
American States Water Company (AWR) : Free Stock Analysis Report
SJW Group (SJW) : Free Stock Analysis Report
Essential Utilities Inc. (WTRG) : Free Stock Analysis Report
