Aris Water Solutions (ARIS) AI Stock Analysis

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Aris Water Solutions

(NYSE:ARIS)

Rating:69Neutral

Price Target:

$26.00

▲(11.35%Upside)

Aris Water Solutions is well-positioned with strong financial performance and robust earnings growth. However, technical analysis signals caution, and high valuation may pose risks. Despite potential headwinds from market volatility, the company’s earnings call reflects confidence in maintaining strong financial health.

Positive Factors

Earnings

ARIS reported 1Q25 results above expectations, benefiting from deferred costs.

Operational Execution

Strong operational execution and solid contracting updates support ARIS’s stock growth.

Strategic Acquisition

Management sees value in the recent McNeill Ranch acquisition and is receiving more inbounds than expected.

Negative Factors

Commodity Prices

Expected slower Permian Basin growth in response to lower commodity prices.

Cost Savings

Outperformance from here may be more challenging with low-hanging fruit on cost savings largely achieved.

Producer Activity

Downside risks to the target price include slower producer activity in the Permian.

Aris Water Solutions (ARIS) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$1.38B

Dividend Yield1.95%

Average Volume (3M)762.25K

Price to Earnings (P/E)28.3

Beta (1Y)1.64

Revenue Growth12.03%

EPS Growth16.65%

CountryUS

Employees276

SectorUtilities

Sector Strength87

IndustryRegulated Water

Share Statistics

EPS (TTM)0.35

Shares Outstanding32,641,525

10 Day Avg. Volume868,428

30 Day Avg. Volume762,250

Financial Highlights & Ratios

PEG Ratio2.50

Price to Book (P/B)1.90

Price to Sales (P/S)0.00

P/FCF Ratio16.14

Enterprise Value/Market Cap1.23

Enterprise Value/Revenue1.02

Enterprise Value/Gross Profit9.58

Enterprise Value/Ebitda2.36

Forecast

1Y Price Target

$28.43

Price Target Upside21.76% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering7

Aris Water Solutions Business Overview & Revenue Model

Company DescriptionAris Water Solutions, Inc. (ARIS) is a leading provider of comprehensive water management solutions primarily tailored for the oil and gas industry. The company operates in sectors related to sustainable water management, offering services such as water sourcing, transportation, recycling, and disposal. Its core products and services are aimed at optimizing the water lifecycle for its clients, thereby promoting responsible water usage and environmental stewardship.

How the Company Makes MoneyAris Water Solutions generates revenue through a multifaceted model centered on service contracts with oil and gas companies. Its key revenue streams include fees for water sourcing, transportation and logistics services, and the recycling and disposal of produced water. The company benefits from long-term agreements and partnerships with major energy producers, ensuring a steady flow of income. Additionally, by leveraging its infrastructure and technology, ARIS provides value-added services that enhance operational efficiency and sustainability for its clients, further contributing to its earnings.

Aris Water Solutions Earnings Call Summary

Earnings Call Date:May 06, 2025

(Q1-2025)

% Change Since: -8.25%|

Next Earnings Date:Jul 30, 2025

Earnings Call Sentiment Positive

Aris Water Solutions reported strong performance in the first quarter of 2025 with record volumes and financial metrics. The company is well-positioned with long-term contracts and a strong customer base. However, there are concerns about potential impacts from commodity price volatility and tariff uncertainties. The company is prepared to moderate capital investments if market conditions change significantly.

Q1-2025 Updates

Positive Updates

Record Volumes and Strong Performance

Aris Water Solutions reported record volumes in both Produced Water Handling and Water Supply, driven by higher-than-anticipated completion activity and sustained demand. Produced Water volumes and Water Solution volumes grew 7% sequentially from the previous quarter.

Adjusted EBITDA and Operating Margin

The company achieved a record adjusted EBITDA of $56.5 million, up 4% sequentially and 6% year-over-year, with an adjusted operating margin of $0.44 per barrel.

Successful Integration of McNeill Ranch

The first quarter marked the first full quarter of integrating McNeill Ranch into operations, and the company is evaluating additional revenue streams such as solar and surface royalty development.

Balance Sheet Improvements

Aris Water Solutions refinanced its senior notes, upsized the offering to $500 million, and received a credit rating upgrade from Moody's.

Negative Updates

Commodity Price and Tariff Uncertainty

The company is monitoring potential impacts from commodity price fluctuations and tariff uncertainties, with a current $6 million to $8 million headwind from the WTI price strip.

Deferred Maintenance Costs

Approximately $2 million of planned well maintenance costs were deferred to the second quarter, benefiting margins by $0.01 per barrel in Q1.

Potential CapEx Cuts Due to Market Volatility

In response to potential customer activity reductions, the company indicated it could reduce capital expenditures by 25% to 30% if necessary.

Company Guidance

In the first quarter of 2025, Aris Water Solutions achieved significant financial and operational milestones, as reported in their earnings call. The company posted an all-time high adjusted EBITDA of $56.5 million, up 4% sequentially and 6% year-over-year, driven by a 7% sequential growth in both Produced Water Handling and Water Solutions volumes. They achieved an adjusted operating margin of $0.44 per barrel, although margins are expected to slightly decrease to between $0.41 and $0.43 per barrel in the second quarter due to anticipated well maintenance expenses and lower skim oil price realizations. Capital expenditures were $21 million, a 44% decrease from the first quarter of the previous year. Looking ahead, Aris expects Produced Water volumes to range between 1.2 million and 1.25 million barrels per day and Water Solutions volumes to be between 475,000 and 525,000 barrels per day in the second quarter. Despite facing potential headwinds from commodity price fluctuations and tariff uncertainties, Aris remains confident in its ability to adapt its capital investments and maintain strong financial health, underscored by a low debt-to-adjusted EBITDA ratio of 2.2 times and $372 million in liquidity.

Aris Water Solutions Financial Statement Overview

Summary

Aris Water Solutions displays strong financial health with a robust income statement, a debt-free balance sheet, and solid cash flow generation. However, capital expenditures are impacting free cash flow growth, necessitating careful future capital management.

Income Statement

Very Positive

Aris Water Solutions shows strong revenue growth with a Revenue Growth Rate of 11.05% in TTM. Gross Profit Margin is robust at 40.86%, indicating efficient cost management. Net Profit Margin improved to 8.01%, reflecting enhanced profitability. The EBIT Margin of 24.81% and EBITDA Margin of 42.92% show solid operational efficiency. Overall, the company exhibits strong growth and profitability trends.

Balance Sheet

Positive

The company has no debt, resulting in a Debt-to-Equity Ratio of 0, which is excellent. Return on Equity is healthy at 10%, driven by improved net income. The Equity Ratio of 24.55% is reasonable, though it indicates moderate leverage. The balance sheet reflects financial stability with no debt obligations, supporting future growth.

Cash Flow

Positive

The Operating Cash Flow to Net Income Ratio is strong at 5.13, reflecting efficient cash generation. However, Free Cash Flow Growth Rate is negative due to capital expenditures. The Free Cash Flow to Net Income Ratio is 2.63, indicating positive cash flow relative to net income. Cash flow is solid, though future growth requires careful capital management.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
435.44M	392.12M	321.00M	229.25M	171.47M
	Gross Profit
177.89M	137.51M	114.00M	77.57M	32.01M
	EBIT
106.75M	83.87M	65.87M	47.27M	7.70M
	EBITDA
185.91M	160.39M	135.50M	79.53M	54.46M
	Net Income Common Stockholders
26.86M	18.89M	4.80M	-7.01M	7.00K
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
28.67M	5.06M	1.12M	60.05M	24.93M
	Total Assets
1.42B	1.34B	1.30B	1.13B	1.06B
	Total Debt
459.59M	443.65M	428.92M	392.05M	297.00M
	Net Debt
430.92M	438.58M	427.80M	332.00M	272.07M
	Total Liabilities
684.83M	652.59M	646.28M	524.15M	349.51M
	Stockholders Equity
348.62M	323.90M	309.51M	212.87M	708.29M
Cash Flow		Free Cash Flow
78.89M	14.14M	-76.31M	-15.85M	-71.82M
	Operating Cash Flow
178.88M	183.87M	70.21M	58.81M	67.77M
	Investing Cash Flow
-145.57M	-149.58M	-136.93M	-74.66M	-139.59M
	Financing Cash Flow
-9.70M	-30.35M	7.78M	50.98M	89.67M

Aris Water Solutions Technical Analysis

Technical Analysis Sentiment

Negative

Last Price23.35

Price Trends

50DMA

26.54

Negative

100DMA

26.92

Negative

200DMA

23.17

Positive

Market Momentum

MACD

-0.80

Negative

RSI

45.57

Neutral

STOCH

51.28

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ARIS, the sentiment is Negative. The current price of 23.35 is below the 20-day moving average (MA) of 23.83, below the 50-day MA of 26.54, and above the 200-day MA of 23.17, indicating a neutral trend. The MACD of -0.80 indicates Negative momentum. The RSI at 45.57 is Neutral, neither overbought nor oversold. The STOCH value of 51.28 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ARIS.

Aris Water Solutions Risk Analysis

Aris Water Solutions disclosed 61 risk factors in its most recent earnings report. Aris Water Solutions 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

Aris Water Solutions Peers Comparison

Overall Rating

UnderperformOutperform

Sector (64)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ARTNA	74 Outperform	$350.30M	16.35	9.04%	3.51%	8.31%	21.97%
MSEX	72 Outperform	$1.03B	23.85	9.80%	2.33%	16.02%	18.29%
HTO	72 Outperform	$1.79B	17.59	7.49%	3.09%	12.34%	11.78%
CWCO	69 Neutral	$426.41M	16.14	7.83%	1.59%	-31.57%	-18.12%
ARIS	69 Neutral	$1.38B	28.33	7.12%	1.95%	12.03%	16.65%
Sector *	64 Neutral	$8.54B	10.24	4.67%	4.36%	4.12%	-13.19%
YORW	58 Neutral	$469.88M	23.86	8.63%	2.63%	3.45%	-19.90%

* Utilities Sector Average

Performance Comparison

ARIS

Aris Water Solutions

23.85

8.99

60.50%

ARTNA

Artesian Resources

34.46

1.16

3.48%

CWCO

Consolidated Water Co

26.79

0.59

2.25%

MSEX

Middlesex Water Company

57.87

7.91

15.83%

HTO

H2O America

52.82

0.15

0.28%

YORW

The York Water Company

32.90

-2.49

-7.04%

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.