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SABESP's (SBS) Q4 Earnings & Revenues Surpass Estimates

Zacks Equity Research

Companhia de Saneamento Basico do Estado de Sao Paulo SBS or SABESP's net income in fourth-quarter 2018 improved 146.1% year over year to R$ 1,507.6 million ($406.9 million). Earnings per share (EPS) totaled R$ 2.21, up from the year-ago figure of R$ 0.90.

Considering the ADR equivalent of EPS, the bottom line in the reported quarter was 58 cents, beating the Zacks Consensus Estimate of 27 cents by 114.8%. Also, the reported figure improved 107.1% from the year-ago level of 28 cents.

Total Revenues
 
In the reported quarter, SABESP's net operating revenues (including construction revenues) were R$4,391.4 million ($1,288 million), up 33.3% year over year. Moreover, the figure surpassed the Zacks Consensus Estimate of $1,081 million by 19.1%.

The year-over-year improvement was driven by increasing billed volumes and the impact of tariff-repositioning index.

Companhia de saneamento Basico Do Estado De Sao Paulo - Sabesp Price, Consensus and EPS Surprise

Companhia de saneamento Basico Do Estado De Sao Paulo - Sabesp Price, Consensus and EPS Surprise | Companhia de saneamento Basico Do Estado De Sao Paulo - Sabesp Quote

Highlights of the Release

In the fourth quarter, costs and expenses, including construction costs, totaled R$ 2,975.5 million ($803.1 million), increasing 0.8% year over year.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were R$ 2,324.3 million ($627.3 million), increasing 66.7% from the prior-year quarter.

Billed water and sewage volumes in 2018 grew 1.5% year over year to 3,749 million cubic meters.

Balance Sheet & Cash Flow

As of Dec 31, 2018, SABESP's cash and cash equivalents were R$3,029.1 million ($780.1 million), up from R$2,283 million ($688.8 million) at the end of 2017. In 2018, loan and financing grew 6.7% from a year ago to R$11,049.2 million ($2,845.7 million).

During the year, cash generation from operating activities was R$5,463 million ($1,474.5 million) versus R$4,910.1 million in 2017.

Guidance
 
The company aims to invest R$18,731 million ($4,721.7 million) in the 2019-2023 time period to strengthen and expand its water supply, sewage collection and sewage treatment business.

Zacks Rank

SABESP currently has a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Water Supply Utilities’ Release

Here are some other players from the water utility space that have reported fourth-quarter earnings. California Water Service Group CWT, SJW Group SJW and Middlesex Water Company MSEX beat the Zacks Consensus Estimate by 14.3%, 25% and 2.4%, respectively.

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