Aris Water Solutions (ARIS) AI Stock Analysis

• Market Cap: $1.45B
• Dividend Yield: 2.13%
• Average Volume (3M): 1.01M
• Price to Earnings (P/E): 29.5
• Beta (1Y): 1.77
• Revenue Growth: 16.42%
• EPS Growth: 12.98%
• Country: US
• Employees: 276
• Sector: Utilities
• Sector Strength: 65
• Industry: Regulated Water
• EPS (TTM): 0.33
• Shares Outstanding: 32,737,644
• 10 Day Avg. Volume: 1,042,122
• 30 Day Avg. Volume: 1,007,268
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 1.12
• Enterprise Value/Revenue: 3.41
• Enterprise Value/Gross Profit: 8.60
• Enterprise Value/Ebitda: 8.75
• 1Y Price Target: $25.43
• Price Target Upside: 3.12% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 9

• Rating: 69 Neutral
• Price Target: $26.00 ▲(5.43% Upside)

Aris Water Solutions demonstrates strong financial performance and positive corporate developments, such as the merger with Western Midstream Partners. However, valuation concerns and technical resistance temper the overall outlook.

Positive Factors

Merger with Western Midstream

The merger with Western Midstream Partners is expected to enhance Aris's market position and offer financial benefits, aligning with strategic goals and expanding its footprint, which could lead to long-term growth opportunities.

Long-term Contracts

The extension of the agreement with ConocoPhillips provides long-term revenue visibility and strengthens Aris's industry position, ensuring stable cash flows and reinforcing its strategic partnerships.

Strong Cash Flow Generation

Robust cash flow generation enhances financial flexibility, allowing Aris to invest in growth opportunities and maintain operations efficiently, supporting its long-term financial health.

Negative Factors

Gross Profit Margin Concerns

Challenges in sustaining gross profit margins could impact profitability, limiting the company's ability to reinvest in its business and potentially affecting long-term financial performance.

Commodity Price Volatility

Volatility in commodity prices can lead to unpredictable revenue streams and increased operational risks, affecting Aris's ability to plan and execute long-term strategies effectively.

High Leverage Levels

While leverage is manageable, historical high leverage levels pose a risk to financial stability, potentially limiting Aris's ability to invest in growth or weather economic downturns.

Aris Water Solutions Business Overview & Revenue Model

Company Description

Aris Water Solutions, Inc., an environmental infrastructure and solutions company, provides water handling and recycling solutions. The company's produced water handling business gathers, transports, unless recycled, and handles produced water generated from oil and natural gas production. Its water solutions business develops and operates recycling facilities to treat, store, and recycle produced water. The company was founded in 2015 and is headquartered in Houston, Texas.

How the Company Makes Money

Aris Water Solutions makes money by providing essential water management services to the oil and gas sectors. The company generates revenue through various streams such as fees for water sourcing, transportation, and disposal for energy producers. Additionally, ARIS earns revenue by offering advanced water recycling solutions that enable its clients to reuse water in drilling and production activities, thereby reducing their freshwater consumption and operational costs. Key partnerships with major oil and gas companies enhance ARIS's market presence and contribute significantly to its earnings by securing long-term contracts and recurring service agreements.

Aris Water Solutions Financial Statement Overview

Summary

Aris Water Solutions shows strong revenue growth and profitability metrics, with robust cash flow generation. However, there are concerns about maintaining gross profit margins and historical leverage levels.

Income Statement

Aris Water Solutions has demonstrated consistent revenue growth, with a TTM revenue growth rate of 5.08% and a strong historical trend. The company maintains healthy gross and net profit margins, with the TTM gross profit margin at 39.67% and net profit margin at 7.56%. The EBIT and EBITDA margins are also robust, indicating efficient operations. However, there is a slight decline in gross profit margin compared to the previous year, which could be a point of concern.

Balance Sheet

The balance sheet shows a moderate debt-to-equity ratio of 1.24 in the TTM period, reflecting a manageable level of leverage. Return on equity has improved to 9.51%, indicating better profitability from shareholders' equity. However, the equity ratio is not explicitly provided, which limits a full assessment of asset financing. The company has shown improvement in financial stability, but the high leverage in previous years remains a potential risk.

Cash Flow

Aris Water Solutions exhibits strong cash flow performance, with a significant free cash flow growth rate of 275.25% in the TTM period. The operating cash flow to net income ratio is 1.89, indicating strong cash generation relative to net income. The free cash flow to net income ratio of 0.77 further supports the company's ability to generate cash. These metrics highlight a robust cash flow position, enhancing financial flexibility.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	475.50M	435.44M	392.12M	321.00M	229.25M	171.47M
Gross Profit	188.65M	177.89M	137.51M	114.00M	77.57M	32.01M
EBITDA	185.29M	185.91M	160.39M	135.50M	79.53M	54.46M
Net Income	28.53M	26.86M	18.89M	1.70M	-9.22M	7.00K
Balance Sheet
Total Assets	1.48B	1.42B	1.34B	1.30B	1.13B	1.06B
Cash, Cash Equivalents and Short-Term Investments	57.36M	28.67M	5.06M	1.12M	60.05M	24.93M
Total Debt	512.31M	459.59M	443.65M	428.92M	392.05M	297.00M
Total Liabilities	689.21M	684.83M	652.59M	646.28M	524.15M	349.51M
Stockholders Equity	412.86M	348.62M	323.90M	309.51M	212.87M	708.29M
Cash Flow
Free Cash Flow	102.97M	78.89M	14.14M	-76.31M	-15.85M	-71.82M
Operating Cash Flow	186.89M	178.88M	183.87M	70.21M	58.81M	67.77M
Investing Cash Flow	-140.20M	-145.57M	-149.58M	-136.93M	-74.66M	-139.59M
Financing Cash Flow	-852.00K	-9.70M	-30.35M	7.78M	50.98M	89.67M

Aris Water Solutions Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 24.66
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ARIS, the sentiment is Positive. The current price of 24.66 is above the 20-day moving average (MA) of 24.10, above the 50-day MA of 23.02, and below the 200-day MA of 25.05, indicating a neutral trend. The MACD of 0.32 indicates Negative momentum. The RSI at 66.22 is Neutral, neither overbought nor oversold. The STOCH value of 90.06 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ARIS.

Aris Water Solutions Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MSEX	75 Outperform	963.89M	21.98	9.92%	2.54%	11.91%	16.88%
ARTNA	74 Outperform	337.13M	14.88	8.53%	3.75%	7.13%	22.19%
CWCO	74 Outperform	559.67M	35.23	7.30%	1.34%	-26.34%	-61.52%
ARIS	69 Neutral	$1.45B	29.49	7.11%	2.13%	16.42%	12.98%
HTO	68 Neutral	1.71B	15.73	7.01%	1.74%	12.40%	11.98%
YORW	61 Neutral	443.45M	22.25	8.40%	2.82%	4.09%	-14.30%
Sector *	66 Neutral	$17.65B	18.10	5.60%	3.62%	6.62%	11.55%

Aris Water Solutions Corporate Events

Aris Water Solutions Merges with Western Midstream Partners

On August 6, 2025, Aris Water Solutions, Inc. entered into a merger agreement with Western Midstream Partners, LP, resulting in Aris becoming a wholly owned subsidiary of WES. The merger is structured through a series of mergers involving multiple subsidiaries and includes various forms of consideration for shareholders. The agreement outlines customary conditions and covenants, including shareholder approval and regulatory clearances. The merger is expected to impact the company’s operations by aligning it more closely with WES’s strategic goals, potentially enhancing its market position and offering financial benefits to stakeholders.

Aris Water Solutions Merges with Western Midstream

On August 6, 2025, Aris Water Solutions, Inc. entered into a merger agreement with Western Midstream Partners, LP, whereby WES will acquire all outstanding shares of Aris in a transaction valued at approximately $1.5 billion. This merger is expected to enhance WES’s competitive position by creating a differentiated produced-water system in the Delaware Basin, expanding its footprint in New Mexico, and diversifying its customer base through Aris’s long-term contracts. The transaction, which includes a mix of equity and cash, is anticipated to close in the fourth quarter of 2025, subject to regulatory and shareholder approvals.

Aris Water Solutions Extends Key Agreement with ConocoPhillips

On July 30, 2025, Aris Water Solutions announced a seven-year extension of its Water Gathering and Disposal Agreement with ConocoPhillips, extending the term to May 31, 2040. This extension solidifies Aris’s position in the industry by providing long-term revenue visibility and strengthening its partnership with ConocoPhillips, a key customer, while maintaining its operational focus in the Northern Delaware Basin.

Aris Water Solutions Elects Directors, Ratifies Auditor

On May 21, 2025, Aris Water Solutions held its Annual Meeting of Stockholders, where stockholders elected three Class I Directors to serve until the 2028 Annual Meeting and ratified the appointment of BDO USA, P.C. as the independent registered public accounting firm for the fiscal year ending December 31, 2025. These decisions are significant for the company’s governance and financial oversight, potentially impacting its strategic direction and stakeholder confidence.