Education
About Us
Working with TipRanks
Follow Us
Companhia De Saneamento Basico Do Estado De Sao (SBS)
NYSE:SBS
Top Page
Companhia De Saneamento
(NYSE:SBS)
81Outperform
Positive Factors
Earnings
Sabesp reported strong 4Q24 results with R$3bn adjusted EBITDA, up 4% YoY and 6% above estimates, driven by cost-cutting initiatives.
Regulation
Change in regulation could add R$4-6bn NPV, positively impacting the company's financials by fixing delays on capex recognition.
Negative Factors
Regulatory Risks
While the end of the revenue gap is not seen as a risk, changes in regulation and initiatives need to ensure protection against material changes.
Companhia De Saneamento (SBS) vs. S&P 500 (SPY)
Market Cap
$12.23B
Dividend Yield1.19%
Average Volume (3M)963.46K
Price to Earnings (P/E)6.9
Beta (1Y)0.48
Revenue Growth41.72%
EPS Growth195.04%
CountryUS
Employees10,552
SectorUtilities
Sector Strength81
IndustryRegulated Water
Share Statistics
EPS (TTM)2.55
Shares Outstanding683,510,000
10 Day Avg. Volume1,298,324
30 Day Avg. Volume963,462
Financial Highlights & Ratios
PEG Ratio0.05
Price to Book (P/B)N/A
Price to Sales (P/S)2.59
Price to Cash Flow (P/CF)N/A
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$23.20Price Target Upside28.89% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering1
Companhia De Saneamento Business Overview & Revenue Model
Company DescriptionCompanhia De Saneamento (SBS), also known as Sabesp, is a leading water and sewage service provider in Brazil. The company operates primarily in the state of São Paulo and is responsible for the planning, execution, and operation of sanitation infrastructure. SBS offers a comprehensive suite of services related to water supply, sewage collection, and sewage treatment, catering to both residential and commercial customers in the region.
How the Company Makes MoneyCompanhia De Saneamento (SBS) generates revenue primarily through the provision of water supply and sewage services. The company's revenue model is based on charging customers for the consumption of water and the treatment of sewage. These charges are typically structured as tariffs, which are regulated by the state government to ensure affordability and access. SBS's key revenue streams include residential, commercial, and industrial water usage, as well as sewage collection and treatment services. In addition, the company may receive government subsidies or support for infrastructure projects, which can also contribute to its earnings. Strategic partnerships with municipalities and investments in infrastructure development further bolster its revenue generation capabilities.
Companhia De Saneamento Financial Statement Overview
Summary
Companhia De Saneamento's financial performance is solid, characterized by strong revenue growth and profitability, a stable balance sheet with moderate leverage, and effective cash flow management. The company is well-positioned in the regulated utilities sector, though it faces potential risks from regulatory changes and interest rate fluctuations. Overall, the financial health is robust with opportunities for sustained growth.Income Statement
Companhia De Saneamento demonstrates strong revenue growth with a TTM revenue growth rate of 39.05% compared to the previous year. The company maintains a robust gross profit margin of 69.52% and a net profit margin of 26.23%. EBIT and EBITDA margins are also high at 44.76% and 52.92%, respectively, indicating strong operational efficiency and profitability. However, the industry is highly regulated, which may limit further margin expansion.85
Very Positive
Balance Sheet
The balance sheet reflects a healthy equity ratio of 49.79%, suggesting a stable financial structure. The debt-to-equity ratio stands at 0.63, indicating moderate leverage that is manageable within the industry. Return on equity (ROE) is strong at 24.61%, showcasing effective use of equity to generate profits. However, the total debt level is significant, which could pose risks if interest rates rise or regulatory conditions change.78
Positive
Cash Flow
Cash flow analysis reveals a positive free cash flow growth rate of 8.83% year-over-year. The operating cash flow to net income ratio is 0.69, suggesting that cash flows are supporting reported earnings effectively. The free cash flow to net income ratio is 0.44, indicating a substantial portion of earnings is translated into free cash flow, which is favorable for reinvestment and debt servicing. However, capital expenditures remain relatively high, which could impact free cash flow if not managed prudently.82
Very Positive
| Breakdown | |||||
| TTM | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 | Dec 2019 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 35.57B | 25.57B | 22.06B | 19.49B | 17.80B | 17.98B | Gross Profit |
| 24.73B | 9.52B | 7.70B | 6.69B | 6.62B | 7.85B | EBIT |
| 15.92B | 6.35B | 4.62B | 4.10B | 4.49B | 5.71B | EBITDA |
| 18.82B | 8.96B | 8.06B | 6.28B | 4.16B | 7.30B | Net Income Common Stockholders |
| 9.33B | 3.52B | 3.12B | 2.31B | 973.32M | 3.37B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 852.52M | 3.27B | 3.55B | 3.15B | 3.81B | 2.25B | Total Assets |
| 22.00B | 61.47B | 57.21B | 53.17B | 50.42B | 46.46B | Total Debt |
| 6.57B | 19.54B | 18.96B | 17.72B | 17.26B | 13.24B | Net Debt |
| 5.71B | 18.70B | 17.09B | 17.01B | 16.86B | 10.99B | Total Liabilities |
| 11.18B | 31.61B | 29.87B | 28.23B | 27.62B | 24.82B | Stockholders Equity |
| 10.82B | 29.86B | 27.33B | 24.93B | 22.79B | 21.64B |
| Cash Flow | Free Cash Flow | ||||
| 4.12B | 4.71B | 3.89B | 3.86B | 4.94B | 4.12B | Operating Cash Flow |
| 6.45B | 4.85B | 3.97B | 3.91B | 4.98B | 4.20B | Investing Cash Flow |
| -8.29B | -4.91B | -2.88B | -2.66B | -6.77B | -3.27B | Financing Cash Flow |
| 2.64B | -977.84M | 60.30M | -929.02M | -66.35M | -1.71B |
Companhia De Saneamento Technical Analysis
Positive
18.00
Price Trends
16.85
Positive
16.09
Positive
16.07
Positive
Market Momentum
0.38
Negative
61.62
Neutral
76.58
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SBS, the sentiment is Positive. The current price of 18 is above the 20-day moving average (MA) of 17.30, above the 50-day MA of 16.85, and above the 200-day MA of 16.07, indicating a bullish trend. The MACD of 0.38 indicates Negative momentum. The RSI at 61.62 is Neutral, neither overbought nor oversold. The STOCH value of 76.58 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for SBS.
Companhia De Saneamento Risk Analysis
Companhia De Saneamento disclosed 39 risk factors in its most recent earnings report. Companhia De Saneamento reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Companhia De Saneamento Peers Comparison
Overall Rating
UnderperformOutperform
Sector (65)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
81 Outperform | $12.23B | 6.87 | 28.81% | 1.19% | 41.72% | 195.04% | |
79 Outperform | $1.84B | 19.08 | 7.23% | 2.96% | 11.65% | 6.78% | |
77 Outperform | $2.88B | 14.89 | 12.46% | 2.36% | 30.48% | 267.73% | |
74 Outperform | $28.76B | 27.37 | 10.44% | 2.07% | 10.63% | 10.38% | |
71 Outperform | $10.83B | 18.11 | 9.84% | 3.25% | 1.57% | 16.50% | |
69 Neutral | $3.00B | 24.84 | 14.01% | 2.32% | -0.04% | -5.82% | |
65 Neutral | $12.17B | 16.15 | 5.32% | 4.37% | 5.50% | -9.06% |
* Utilities Sector Average
Performance Comparison
SBS
Companhia De Saneamento
18.00
2.07
12.99%
AWR
American States Water
78.76
10.34
15.11%
AWK
American Water
147.00
30.15
25.80%
WTRG
Essential Utilities
39.55
4.43
12.61%
CWT
California Water Service
48.71
3.79
8.44%
SJW
SJW
54.17
0.95
1.79%
Companhia De Saneamento Earnings Call Summary
Earnings Call Date: Mar 24, 2025 | % Change Since: 4.53% | Next Earnings Date: May 12, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed picture. While there were positive developments in revenue and EBITDA growth, operational cash generation, and new strategic directions post-privatization, significant challenges remain. These include regulatory impacts, transition costs, and construction delays. The company is focused on overcoming these hurdles with a new management team and investment strategies.Highlights
Revenue and EBITDA Growth
Net revenue increased by 7%, and EBITDA grew by 17% driven by a 2% increase in volume and pricing adjustments.
Operational Cash Generation
Generated operational cash of BRL 1.6 billion, which was almost entirely reinvested in the asset base.
Strategic Privatization and Transition
Privatization process enabled SABESP to transition from a state-owned model to a private one, allowing for potential operational and financial improvements.
Investment Program
Completion of BRL 1.4 billion investment this quarter with a significant investment program planned, including over BRL 60 billion for universalization of services.
Formation of New Management Team
New management team established to guide SABESP through privatization and operational transformation.
Lowlights
Impact of Regulatory Adjustments
Revenue impacted by regulatory adjustments, including a 1% tariff reduction post-privatization.
Concession Contract Challenges
New concession contract presents challenges with regulatory parameters and tariff reviews.
Transition and Non-Recurring Costs
Incurred costs associated with privatization and transition, leading to non-recurring effects on operations.
Gap in Commercial Programs
Identified gaps in commercial programs leading to approximately 500 contract terminations.
Construction Delays
Delays in construction works attributed to transition period, with ongoing efforts to accelerate execution.
Company Guidance
During the Q3 2024 earnings call for SBSP3.SA, the management team provided comprehensive guidance on several financial metrics and strategic initiatives. Daniel Szlak, the CFO, detailed a 7% increase in net revenue, translating into a 17% rise in EBITDA, driven by a 2% growth in volume and pricing adjustments. The company reported a gross revenue impact of approximately BRL 8.8 billion due to deferred revenue adjustments under IFRS 12. Operational cash generation stood at BRL 1.6 billion, reinvested into the asset base. The privatization transition incurred non-recurring costs, yet the company saw a 6.4% tariff readjustment, netting a positive effect of around 5%. Additionally, SABESP completed BRL 1.4 billion in investments this quarter, with expectations to reach BRL 6.5 to 7 billion by year-end, despite transitioning from public to private procurement processes. The call also highlighted the company's strategic focus on universal sanitation, cost control, and an efficient capital structure, aiming to leverage a planned BRL 60 billion investment over five years.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.