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SJW (SJW)
NASDAQ:SJW
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SJW
(NASDAQ:SJW)77Outperform
Positive Factors
Earnings Growth
The 25% increase in 5-year capital expenditure budget supports earnings growth in the top half of the 5-7% range.
Leadership
CFO Andrew Walters, who is considered a capable leader, will take over as CEO, and during his tenure as CFO, SJW's financial execution and communications have improved the company's credibility.
Negative Factors
Financing Risks
There are financing risks, including a forecasted need for $425 million in equity over the 2025-2029 period, which is about 25% of the current market cap.
SJW (SJW) vs. S&P 500 (SPY)
Market Cap
$1.83B
Dividend Yield2.98%
Average Volume (3M)313.39K
Price to Earnings (P/E)19.0
Beta (1Y)0.51
Revenue Growth11.65%
EPS Growth6.78%
CountryUS
Employees808
SectorUtilities
Sector Strength79
IndustryRegulated Utilities
Share Statistics
EPS (TTM)2.86
Shares Outstanding33,671,364
10 Day Avg. Volume284,339
30 Day Avg. Volume313,387
Financial Highlights & Ratios
PEG Ratio2.80
Price to Book (P/B)N/A
Price to Sales (P/S)2.45
Price to Cash Flow (P/CF)11.00
P/FCF Ratio7.80
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$58.33Price Target Upside7.09% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering3
SJW Business Overview & Revenue Model
Company DescriptionSJW Group operates as a holding company, which through its subsidiaries provides water utility services. It operates through two segments: Water Utility Services and Real Estate Services. The water utility services segment provides water utility and utility related services. The Real Estate Services segment engages in property management and investment activity. . The company was founded on February 8, 1985 and is headquartered in San Jose, CA.
How the Company Makes MoneySJW generates revenue by charging customers for water and wastewater services based on consumption and service fees. These charges are regulated and approved by public utility commissions, ensuring they are fair and sufficient to cover operational costs and provide a reasonable return on investment. The company's earnings are also supported by infrastructure investments and maintenance, which are factored into the rate base and approved rates. Additionally, SJW may engage in strategic partnerships or acquisitions to expand its service areas and customer base, which can further contribute to its revenue streams.
SJW Financial Statement Overview
Summary
SJW has shown strong financial growth and stability across its income statement, balance sheet, and cash flow. The company exhibits a robust revenue trajectory and improved profitability. The balance sheet is solid with decreasing leverage, and cash flows have significantly improved. However, careful management of capital expenditures will be crucial to sustain this positive trend.Income Statement
SJW has demonstrated consistent revenue growth over the years, with a strong increase from $670M in 2023 to $748M in 2024. The gross profit margins are high due to the regulated nature of the utilities industry, with a gross profit of $748M in 2024. The net profit margin also shows improvement, reaching 12.5% in 2024 from 12.7% in 2023. EBIT and EBITDA margins have been stable, reflecting efficient operations. However, maintaining or improving these margins amid rising costs could be a challenge.85
Very Positive
Balance Sheet
SJW's balance sheet shows robust equity growth, with stockholders' equity increasing from $1.23B in 2023 to $1.37B in 2024. The debt-to-equity ratio has improved due to lower total debt, decreasing from 1.42 in 2023 to 0.002 in 2024, indicating a strong financial position. However, the equity ratio has decreased slightly due to an increase in total assets, which may raise concerns about asset efficiency.78
Positive
Cash Flow
The company has significantly improved its free cash flow, turning from a negative $99M in 2023 to a positive $195M in 2024, highlighting strong cash generation capabilities. The operating cash flow to net income ratio is favorable at approximately 2.08 in 2024, indicating effective conversion of income into cash flow. However, the high capital expenditure could impact cash reserves if not controlled.82
Very Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 748.44M | 670.36M | 620.70M | 573.69M | 564.53M | Gross Profit |
| 748.44M | 388.43M | 357.17M | 318.57M | 316.58M | EBIT |
| 170.50M | 149.44M | 130.98M | 111.16M | 117.67M | EBITDA |
| 289.38M | 265.23M | 236.24M | 309.49M | 208.92M | Net Income Common Stockholders |
| 93.97M | 84.99M | 73.83M | 60.48M | 61.52M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 1.31M | 9.72M | 12.34M | 10.91M | 5.27M | Total Assets |
| 1.96B | 4.35B | 3.63B | 3.49B | 3.32B | Total Debt |
| 3.00M | 1.75B | 1.66B | 1.60B | 1.54B | Net Debt |
| 1.69M | 1.74B | 1.64B | 1.58B | 1.53B | Total Liabilities |
| 589.25M | 3.11B | 2.52B | 2.45B | 2.40B | Stockholders Equity |
| 1.37B | 1.23B | 1.11B | 1.03B | 917.16M |
| Cash Flow | Free Cash Flow | |||
| 195.53M | -99.89M | -78.04M | -123.77M | -110.92M | Operating Cash Flow |
| 195.53M | 190.83M | 166.20M | 130.04M | 104.05M | Investing Cash Flow |
| -340.10M | -322.27M | -244.33M | -260.00M | -214.26M | Financing Cash Flow |
| 145.96M | 128.82M | 78.35M | 132.81M | 101.53M |
SJW Technical Analysis
Positive
54.47
Price Trends
49.85
Positive
52.49
Positive
54.33
Positive
Market Momentum
1.07
Negative
62.70
Neutral
71.86
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SJW, the sentiment is Positive. The current price of 54.47 is above the 20-day moving average (MA) of 52.51, above the 50-day MA of 49.85, and above the 200-day MA of 54.33, indicating a bullish trend. The MACD of 1.07 indicates Negative momentum. The RSI at 62.70 is Neutral, neither overbought nor oversold. The STOCH value of 71.86 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for SJW.
SJW Risk Analysis
SJW disclosed 34 risk factors in its most recent earnings report. SJW reported the most risks in the “Legal & Regulatory” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
SJW Peers Comparison
Overall Rating
UnderperformOutperform
Sector (65)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $1.83B | 19.00 | 6.87% | 2.98% | 11.65% | 6.78% | |
76 Outperform | $1.06B | 24.15 | 9.96% | 2.23% | 15.40% | 40.04% | |
75 Outperform | $2.77B | 14.31 | 11.65% | 2.46% | 30.48% | 267.73% | |
73 Outperform | $2.96B | 24.50 | 12.96% | 2.34% | -0.04% | -5.82% | |
71 Outperform | $10.65B | 17.86 | 9.60% | 3.28% | 1.57% | 16.50% | |
65 Neutral | $12.05B | 15.92 | 6.71% | 4.32% | 8.04% | 3.76% | |
61 Neutral | $482.40M | 22.70 | 8.79% | 2.57% | 9.03% | -7.20% |
* Utilities Sector Average
Performance Comparison
SJW
SJW
54.18
-1.26
-2.27%
AWR
American States Water
77.52
7.76
11.12%
WTRG
Essential Utilities
38.49
4.72
13.98%
CWT
California Water Service
46.57
2.05
4.60%
MSEX
Middlesex Water Company
59.52
8.79
17.33%
YORW
The York Water Company
33.43
-0.97
-2.82%
SJW Earnings Call Summary
Earnings Call Date: Feb 26, 2025 | % Change Since: 2.21% | Next Earnings Date: Apr 23, 2025
Earnings Call Sentiment Positive
The earnings call presented a strong financial performance with significant revenue growth and capital investment plans. Regulatory approvals and recognition for corporate responsibility were notable achievements. However, challenges such as increased water production costs, drought impacts in Texas, and rising PFAS treatment expenses were highlighted as areas of concern.Highlights
Strong Financial Performance
SJW Group delivered a nearly 11% increase in net income from 2023 on a GAAP basis, and reported $2.87 diluted earnings per share and $2.95 adjusted diluted earnings per share for 2024, which was ahead of guidance.
Revenue Growth
Revenue for 2024 was $748.4 million, a 12% increase over the $670.4 million reported in 2023, driven by rate increases and higher customer usage.
Significant Capital Investment
The company invested $353 million in water and wastewater utility infrastructure across all four states in 2024, and is increasing its five-year capital plan by 25% to approximately $2 billion.
Regulatory Approvals and Achievements
Gained approval for increases in infrastructure recovery mechanisms in Maine and achieved a record year of recovery through WICA in Connecticut. Secured CPUC approval for rate cases and deferred cost of capital filing in California.
Recognition for Responsibility and Safety
SJW Group was recognized by Newsweek as one of America's Most Responsible Companies 2025 and achieved a platinum level award for construction safety for Connecticut Water.
Lowlights
Increased Cost of Water Production
Water production expense increased 14% in 2024, driven by rate increases from water wholesalers and higher customer usage.
Challenges in Texas Due to Drought
Significant drought in Texas service areas led to water conservation measures, resulting in lower water usage and highlighting the need for enhanced system resiliency.
Rising PFAS Treatment Costs
Estimated costs for PFAS treatment have risen significantly, with Connecticut's estimated cost increasing from $120 million to $190 million, and a total commitment of $300 million.
Company Guidance
During the SJW Group Fourth Quarter 2024 Financial Results Conference Call, Eric Thornburg, the CEO, highlighted several key metrics and guidance for the future. The company reported a nearly 11% increase in net income from 2023 on a GAAP basis, with earnings per diluted share of $2.87 and adjusted non-GAAP earnings per diluted share of $2.95 for 2024. SJW Group announced a 2025 guidance range of $2.90 to $3 per share and plans to invest $473 million in capital expenditures during 2025. The company's five-year capital plan increased by 25% to approximately $2 billion. SJW Group extended its long-term earnings growth rate of 5% to 7% through 2029, aiming for the top half of the range. The company also secured regulatory approvals, including a constructive decision from the California Public Utilities Commission (CPUC) for San Jose Water's 2025-2027 general rate case, and deferred its 2025 cost of capital filing to 2026. Additionally, the company invested $353 million in infrastructure across four states in 2024 and was recognized by Newsweek as one of America's Most Responsible Companies for 2025.SJW Corporate Events
Executive/Board Changes
SJW Group Announces New CEO and Leadership Changes
Neutral
Mar 3, 2025
On February 26, 2025, SJW Group announced significant leadership changes effective July 1, 2025, as Andrew F. Walters will become the new Chief Executive Officer, succeeding Eric W. Thornburg, who will retire but continue as non-executive Chair of the Board. The Executive Compensation Committee outlined Walters’ compensation, including a base salary of $685,000 and various incentive opportunities. Additionally, Bruce Hauk will take on the role of President alongside his current position as Chief Operating Officer, and Kristen Johnson will become President of the Shared Services organization, with both receiving adjusted compensation packages.
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.