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Aris Water Solutions (ARIS)
NYSE:ARIS
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Aris Water Solutions
(NYSE:ARIS)
Rating:71Outperform
Price Target:
$27.00
▲(15.04%Upside)
Positive Factors
Financial Performance
ARIS reported results above expectations, benefiting from deferred costs, indicating a strong financial performance.
Operational Execution
Strong operational execution and solid contracting updates support ARIS’s stock growth.
Strategic Acquisitions
Management sees value in the recent McNeill Ranch acquisition, receiving more inbounds than expected, highlighting strategic growth.
Negative Factors
Commodity Prices
Expected slower Permian Basin growth in response to lower commodity prices could negatively impact stock performance.
Cost Savings Challenges
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, which could affect growth.
Aris Water Solutions (ARIS) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.43B
Dividend Yield1.94%
Average Volume (3M)737.99K
Price to Earnings (P/E)29.3
Beta (1Y)1.61
Revenue Growth12.03%
EPS Growth16.65%
CountryUS
Employees276
SectorUtilities
Sector Strength80
IndustryRegulated Water
Share Statistics
EPS (TTM)0.35
Shares Outstanding32,641,525
10 Day Avg. Volume698,667
30 Day Avg. Volume737,991
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 Cap1.19
Enterprise Value/Revenue1.02
Enterprise Value/Gross Profit9.58
Enterprise Value/Ebitda2.36
Forecast
1Y Price Target
$28.17Price Target Upside20.03% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering6
Aris Water Solutions Business Overview & Revenue Model
Company DescriptionAris Water Solutions (ARIS) is a leading provider of comprehensive water management and recycling solutions, primarily serving the oil and gas industry in the United States. The company focuses on delivering sustainable water infrastructure and services, including water sourcing, transportation, disposal, and recycling, to optimize water use and minimize environmental impact in energy production operations.
How the Company Makes MoneyAris 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 Earnings Call Summary
Earnings Call Date:May 06, 2025
(Q1-2025)
| % Change Since: -7.23%|
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
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.85
Very Positive
Balance Sheet
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.75
Positive
Cash Flow
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.70
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| 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
Positive
23.47
Price Trends
25.13
Negative
26.69
Negative
23.36
Positive
Market Momentum
-0.41
Negative
50.63
Neutral
65.05
Neutral
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 23.47 is above the 20-day moving average (MA) of 23.02, below the 50-day MA of 25.13, and above the 200-day MA of 23.36, indicating a neutral trend. The MACD of -0.41 indicates Negative momentum. The RSI at 50.63 is Neutral, neither overbought nor oversold. The STOCH value of 65.05 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 |
|---|---|---|---|---|---|---|---|
72 Outperform | $1.01B | 23.44 | 9.80% | 2.40% | 16.02% | 18.29% | |
72 Outperform | $1.80B | 17.65 | 7.49% | 3.17% | 12.34% | 11.78% | |
71 Outperform | $1.43B | 29.26 | 7.12% | 1.94% | 12.03% | 16.65% | |
71 Outperform | $353.68M | 16.51 | 9.04% | 3.57% | 8.31% | 21.97% | |
69 Neutral | $431.82M | 16.37 | 7.83% | 1.57% | -31.57% | -18.12% | |
64 Neutral | $8.53B | 10.25 | 4.70% | 4.38% | 4.14% | -13.04% | |
58 Neutral | $466.42M | 23.69 | 8.63% | 2.68% | 3.45% | -19.90% |
* Utilities Sector Average
Performance Comparison
ARIS
Aris Water Solutions
23.85
9.48
65.97%
ARTNA
Artesian Resources
33.30
0.37
1.12%
CWCO
Consolidated Water Co
27.17
1.56
6.09%
MSEX
Middlesex Water Company
56.20
4.84
9.42%
HTO
H2O America
52.00
0.89
1.74%
YORW
The York Water Company
31.79
-3.57
-10.10%
Aris Water Solutions Corporate Events
Executive/Board ChangesShareholder Meetings
Aris Water Solutions Elects Directors, Ratifies Auditor
Neutral
May 28, 2025
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.
The most recent analyst rating on (ARIS) stock is a Hold with a $17.00 price target. To see the full list of analyst forecasts on Aris Water Solutions stock, see the ARIS Stock Forecast page.
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.