California Water Service (CWT) AI Stock Analysis

• Market Cap: $2.80B
• Dividend Yield: 2.88%
• Average Volume (3M): 369.05K
• Price to Earnings (P/E): 20.1
• Beta (1Y): 0.04
• Revenue Growth: -2.60%
• EPS Growth: -33.78%
• Country: US
• Employees: 1,278
• Sector: Utilities
• Sector Strength: 65
• Industry: Regulated Water
• EPS (TTM): 0.19
• Shares Outstanding: 59,642,845
• 10 Day Avg. Volume: 425,160
• 30 Day Avg. Volume: 369,052
• PEG Ratio: -0.59
• Price to Book (P/B): 1.53
• Price to Sales (P/S): 2.58
• P/FCF Ratio: -12.04
• Enterprise Value/Market Cap: 1.53
• Enterprise Value/Revenue: 4.29
• Enterprise Value/Gross Profit: 8.53
• Enterprise Value/Ebitda: 12.96
• 1Y Price Target: $51.00
• Price Target Upside: 8.53% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 1
• EPS Forecast (FY): 2.62
• Revenue Forecast (FY): $1.11B

• Rating: 61 Neutral
• Price Target: $47.00 ▲(0.02% Upside)
• Action: Reiterated Date: 02/27/26
• Date: Action: Reiterated 02/27/26

The score is primarily constrained by financials—especially persistent negative free cash flow alongside recent revenue/earnings softness—despite steady utility-level profitability and a generally manageable balance sheet. The earnings call adds support with credible rate-base growth plans, regulatory progress, liquidity strength, and shareholder-return commitment, while technicals and valuation appear neutral-to-modestly supportive rather than strongly bullish.

Positive Factors

Rate-base growth via capital investment

Heavy, sustained capital deployment increases regulated rate base, the core long-term earnings driver for utilities. Management's record $517M 2025 investment and projected ~12% compounded rate-base growth through 2027 (if approved) should support durable tariff revenue recovery and steady cash generation as new investments roll into rates.

Strong regulatory positions & ROE protection

An authorized 10.27% allowed ROE and CPUC approval of interim rate adjustments materially reduce regulatory earnings risk. This preserved return profile and interim cash recovery bolster the utility's ability to recoup investments through rates, supporting predictable operating cash flows and investment economics over multiple years.

Accretive strategic acquisitions and geographic growth

Targeted acquisitions expand regulated rate base and customer density in growth markets, diversifying geography and revenue sources. Nexus and BVRT add connections and development pipelines that can be accretive to earnings once integrated, enhancing long-term organic growth visibility beyond weather-driven demand swings in any single state.

Negative Factors

Persistent negative free cash flow

Sustained negative free cash flow forces reliance on external financing (debt or equity) to fund capex and dividends. Even with ample credit lines, persistent FCF deficits heighten refinancing frequency and cost, constrain balance-sheet flexibility for contingencies, and magnify funding risk if capital plans or recoveries slip.

Large PFAS capital exposure

A roughly $235M unfunded PFAS investment obligation presents a material, multi-year funding gap. Limited recoveries to date mean the company must rely on grants, litigation recoveries, or rate case approvals; absent full recovery this spending could compress returns, increase leverage, or force reprioritization of other infrastructure projects.

Regulatory timing and affordability uncertainty

Pending major rate-case decisions and heightened affordability scrutiny increase revenue timing and quantum risk. Delays or reduced authorized increases would postpone recovery of invested capital and required expenses, raising interim financing needs and making long-term cash flows and returns more contingent on regulatory outcomes.

California Water Service Business Overview & Revenue Model

Company Description

California Water Service Group, through its subsidiaries, provides water utility and other related services in California, Washington, New Mexico, Hawaii, and Texas. The company is involved in the production, purchase, storage, treatment, testing, distribution, and sale of water for domestic, industrial, public, and irrigation uses, as well as for fire protection. It offers its services to approximately 494,500 customer connections in 100 California communities; approximately 6,200 water and wastewater customer connections on the islands of Maui and Hawaii; approximately 36,400 customer connections in the Tacoma, Olympia, Graham, Spanaway, Puyallup, and Gig Harbor areas; and approximately 8,600 water and wastewater customer connections in the Belen, Los Lunas, Indian Hills, and Elephant Butte areas in New Mexico. The company also engages in the provision of non-regulated water-related services, including operating of municipally owned water systems, privately owned water, and recycled water distribution systems; water system operation, meter reading, and billing services to private companies and municipalities; leasing of communication antenna sites on its properties to telecommunication companies; and billing of optional third-party insurance programs to its residential customers, as well as provides lab services. In addition, it offers wastewater collection and treatment services. The company was founded in 1926 and is headquartered in San Jose, California.

How the Company Makes Money

California Water Service generates revenue primarily through the sale of water to its customers, which includes residential, commercial, and industrial users. The company operates under a regulated pricing structure, where rates are set by state utility commissions based on the cost of providing service, infrastructure investments, and operational expenses. Key revenue streams include monthly water service charges, connection fees for new customers, and charges for additional services such as water quality testing and emergency services. CWT may also participate in public-private partnerships and government contracts that provide additional revenue opportunities. Factors contributing to its earnings include effective water management practices, infrastructure investments, and regulatory frameworks that allow for reasonable rate adjustments to meet operational costs and ensure service reliability.

California Water Service Financial Statement Overview

Summary

Profitability is solid for a regulated utility (TTM ~13% net margin and ~33% EBITDA margin) and the balance sheet appears manageable, but earnings and revenue are down versus 2024 and free cash flow is persistently negative (about -$243M TTM and negative across all years shown), implying ongoing reliance on external funding to support capital needs and dividends.

Income Statement

TTM (Trailing-Twelve-Months) results show solid profitability for a regulated utility (about 13% net margin and ~33% EBITDA margin), but earnings are down versus 2024 as revenue declined ~22% and margins compressed from last year’s unusually strong levels. Longer-term, revenue and profit have been positive but uneven (notably a step-up in 2024 followed by a pullback in TTM), which reduces visibility on the near-term trajectory.

Balance Sheet

Leverage looks conservative in TTM (debt-to-equity near zero), and equity has grown steadily over time, supporting balance-sheet resilience. That said, annual periods (2020–2024) show materially higher leverage (debt-to-equity generally ~0.85–1.27), so the latest reading may reflect timing/classification rather than a permanent deleveraging trend. Returns on equity are moderate (mid-to-high single digits in TTM; peaked higher in 2024), consistent with a regulated business but not exceptional.

Cash Flow

Operating cash generation is healthy in TTM, but free cash flow remains negative (roughly -$243M TTM and negative in every year shown), indicating sustained capital spending needs. Cash conversion versus earnings is also weak, with operating cash flow running below net income in recent periods and free cash flow-to-net income consistently negative—signaling ongoing reliance on external funding (debt/equity) to support investment and dividends.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	1.00B	1.04B	794.63M	846.43M	790.91M
Gross Profit	367.43M	989.12M	363.38M	530.35M	483.77M
EBITDA	358.02M	424.26M	217.54M	263.34M	259.87M
Net Income	128.21M	190.81M	51.91M	96.01M	101.13M
Balance Sheet
Total Assets	5.67B	5.18B	4.70B	3.95B	3.62B
Cash, Cash Equivalents and Short-Term Investments	51.82M	50.12M	84.97M	85.03M	78.38M
Total Debt	1.62B	1.40B	1.25B	1.14B	1.10B
Total Liabilities	3.98B	3.54B	3.27B	2.62B	2.45B
Stockholders Equity	1.69B	1.64B	1.43B	1.32B	1.17B
Cash Flow
Free Cash Flow	-214.43M	-179.93M	-165.93M	-83.98M	-61.48M
Operating Cash Flow	302.56M	290.87M	217.82M	243.77M	231.72M
Investing Cash Flow	-520.14M	-474.87M	-389.42M	-335.52M	-300.87M
Financing Cash Flow	219.26M	194.72M	171.54M	96.12M	104.68M

California Water Service Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 46.99
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CWT, the sentiment is Positive. The current price of 46.99 is above the 20-day moving average (MA) of 45.54, above the 50-day MA of 44.45, and above the 200-day MA of 45.16, indicating a bullish trend. The MACD of 0.52 indicates Negative momentum. The RSI at 60.64 is Neutral, neither overbought nor oversold. The STOCH value of 72.89 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for CWT.

California Water Service Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
WTRG	69 Neutral	$11.36B	17.43	10.29%	3.48%	21.35%	20.96%
AWK	67 Neutral	$26.51B	22.91	10.50%	2.51%	12.29%	13.13%
MSEX	67 Neutral	$1.03B	26.96	9.09%	2.67%	6.24%	3.35%
Sector *	66 Neutral	$17.65B	18.10	5.60%	3.62%	6.62%	11.55%
AWR	62 Neutral	$3.02B	21.42	13.22%	2.64%	10.28%	13.56%
CWT	61 Neutral	$2.80B	20.13	7.71%	2.88%	-2.60%	-33.78%
YORW	58 Neutral	$479.88M	22.88	8.51%	2.68%	3.63%	-5.82%

California Water Service Corporate Events

California Water Service Reports Lower Earnings Amid Wet Weather

On February 25, 2026, California Water Service Group reported that fourth-quarter 2025 net income fell 42% year on year to $11.5 million on slightly lower revenue of $220 million, as unusually wet December weather in California reduced customer consumption and unbilled revenue while operating expenses rose. For full-year 2025, net income declined 32.8% to $128.2 million and reported revenue slipped 3.5% to $1.0 billion, though on a non-GAAP basis the company posted modest earnings and revenue growth once the impact of delayed 2021 California rate relief booked in 2024 is excluded.

Despite the earnings pressure, management highlighted 2025 as a milestone year, with a record $517 million invested in water infrastructure, completion of rate cases in Hawaii and Washington adding $5.1 million in authorized revenue and new financing via $170 million of notes and $200 million of bonds. The company also continued its expansion strategy by agreeing to acquire Nexus Water Group’s Nevada and Oregon subsidiaries for about $218 million, pursuing full ownership of BVRT Utility Holding Company’s Texas utilities, and securing rights to own and operate wastewater and recycled water systems for a major development in San Bernardino County, while lifting its annual dividend by 10.71% and signaling that a proposed decision in its key 2024 California General Rate Case could arrive within weeks, a ruling that will be central to future earnings and customer rates.

The most recent analyst rating on (CWT) stock is a Hold with a $48.00 price target. To see the full list of analyst forecasts on California Water Service stock, see the CWT Stock Forecast page.

California Water Service Marks 59th Consecutive Dividend Increase

On January 28, 2026, California Water Service Group’s board declared its 324th consecutive quarterly dividend, setting the payout at $0.3350 per common share, payable on February 20, 2026, to shareholders of record as of February 9, 2026. The decision marks the company’s 59th consecutive annual dividend increase and coincides with its 100th anniversary, reflecting a long-standing commitment to returning capital to investors and underscoring the water utility’s emphasis on dividend stability and shareholder value.

The most recent analyst rating on (CWT) stock is a Hold with a $46.00 price target. To see the full list of analyst forecasts on California Water Service stock, see the CWT Stock Forecast page.