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California Water Service
(NYSE:CWT)
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Rating:64Neutral
Price Target:
$56.00
â–²(10.41% Upside)
Action:Reiterated
Date:07/30/26
The score is driven primarily by stable regulated financial performance but meaningfully limited by consistently negative free cash flow and weak cash conversion. Technicals are supportive with the stock above key moving averages, while valuation looks elevated on a 26.25 P/E despite a moderate 2.42% yield. The latest earnings call adds support via improved revenue visibility and strong liquidity, partially offset by near-term earnings pressure and execution/regulatory risks.
Positive Factors
Regulatory revenue visibility from CPUC decision
A constructive CPUC decision that locks in multi-year revenue increases materially improves long-term earnings visibility for a regulated utility. It supports recovery of capital and operating costs, reduces regulatory timing risk, and underpins multi-year planning for infrastructure investment and cash returns.
Negative Factors
Persistently negative free cash flow
Consistent negative free cash flow signals that internal cash generation lags capital spending and dividends, forcing reliance on external financing. Over months this raises refinancing and funding risk, constrains optionality for investments, and can pressure payout sustainability if capex or working capital remain elevated.
Read all positive and negative factors
Positive Factors
Negative Factors
Regulatory revenue visibility from CPUC decision
A constructive CPUC decision that locks in multi-year revenue increases materially improves long-term earnings visibility for a regulated utility. It supports recovery of capital and operating costs, reduces regulatory timing risk, and underpins multi-year planning for infrastructure investment and cash returns.
Read all positive factors
California Water Service (CWT) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$3.14B
Dividend Yield2.46%
Average Volume (3M)509.31K
Price to Earnings (P/E)26.3
Beta (1Y)-0.05
Revenue Growth4.20%
EPS Growth-12.47%
CountryUS
Employees1,336
SectorUtilities
Sector Strength65
IndustryRegulated Water
Share Statistics
EPS (TTM)2.00
Shares Outstanding59,853,264
10 Day Avg. Volume415,308
30 Day Avg. Volume509,305
Financial Highlights & Ratios
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<0.01
Enterprise Value/Revenue<0.01
Enterprise Value/Gross Profit<0.01
Enterprise Value/Ebitda<0.01
Forecast
1Y Price Target
$54.00Price Target Upside6.47% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering1
EPS Forecast (FY)2.62
Revenue Forecast (FY)$1.11B
California Water Service Business Overview & Revenue Model
Company Description
California Water Service Group (CWT), through its various subsidiaries, operates as a water utility, delivering essential water services and related offerings across several states, including California, Washington, New Mexico, Hawaii, and Texas. ...
How the Company Makes Money
CWT makes money primarily by operating regulated water utilities that charge customers for water service under rates approved by state utility regulators. The core revenue stream is water service revenue collected through customer bills, which gen...
California Water Service Earnings Call Summary
Earnings Call Date:Apr 30, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:Oct 22, 2026
Earnings Call Sentiment Positive
The call presents a broadly constructive outlook: management received a favorable revised proposed decision on the California GRC providing multi-year revenue visibility, increased capital investment plans, strong liquidity and credit ratings, progress on strategic M&A to diversify geography and services, meaningful PFAS legal recoveries, and an ongoing dividend increase. Offsetting these positives are a pronounced drop in quarterly net income and EPS driven by reduced tax credits and higher depreciation/interest, consumption variability, implementation complexity from the delayed rate case, and regulatory uncertainty (PFAS and potential microplastics rules) that could require additional capital. On balance the positive regulatory outcome, strong balance sheet, capital investment momentum, and M&A progress outweigh the near-term earnings challenges and execution risks.Positive Updates
Constructive Revised Proposed Decision on 2024 California GRC
Revised proposed decision provides clear visibility into revenue growth (approximately $91M in 2026, $43M in 2027, and $49M in 2028), preserves key regulatory mechanisms (Monterey-style RAM), authorizes multiple cost balancing accounts (pension, health care, new general insurance liability), introduces a sales reconciliation mechanism and updated rate design to better support fixed cost recovery — management describes the PD as constructive and supportive of infrastructure investment and earnings stability.
Negative Updates
Sharp Decline in Net Income and EPS
Net income for Q1 2026 was $4.0M compared to $13.3M in Q1 2025, a decline of roughly 70%; diluted EPS fell to $0.07 from $0.22, a decrease of about 68%, reflecting notable earnings pressure despite revenue increases.
Read all updates
Q1-2026 Updates
Positive
Negative
Constructive Revised Proposed Decision on 2024 California GRC
Revised proposed decision provides clear visibility into revenue growth (approximately $91M in 2026, $43M in 2027, and $49M in 2028), preserves key regulatory mechanisms (Monterey-style RAM), authorizes multiple cost balancing accounts (pension, health care, new general insurance liability), introduces a sales reconciliation mechanism and updated rate design to better support fixed cost recovery — management describes the PD as constructive and supportive of infrastructure investment and earnings stability.
Read all positive updates
Company Guidance
The call’s guidance was constructive: the revised proposed decision would add approximately $91M of revenue in 2026, $43M in 2027 and $49M in 2028, preserve key mechanisms (Monterey‑style RAM) and add a sales reconciliation/rate redesign, with interim rates retroactive to Jan. 1 and new tariffs planned to bill July 1; the company expects a 2026 capital program of $627M (Q1 capex $129.5M, up 17.6%) that would support >11% compounded annual rate‑base growth. Liquidity and capital metrics include $58.1M unrestricted cash, $45.6M restricted cash, ≈$470M available on bank lines, $600M facilities expandable to $800M (maturing into Mar. 2028), and >$340M shelf capacity after $6.1M of ATM sales; S&P rating A+ (stable). Q1 revenue was $214.6M with net income $4M ($0.07 diluted EPS) vs. $204M and $13.3M ($0.22) a year ago; rate increases added $0.11/share and accrued/unbilled added $0.06, while higher depreciation/interest and tax changes reduced EPS by ~$0.32. The company declared its 325th consecutive quarterly dividend of $0.335/share (2026 annual dividend $1.34, +8.1% year over year), is pursuing Nexus and BVRT deals (Nexus would add ~100k connections, ~20% of total), and has recovered ~$66.5M gross (~$50M net) toward PFAS costs—roughly 20–25% of expected PFAS spending, with about $60M earmarked for well replacements and the remainder for treatment.California Water Service Financial Statement Overview
Summary
Income Statement
72
Positive
Balance Sheet
68
Positive
Cash Flow
42
Neutral
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 1.01B | 1.00B | 1.04B | 794.63M | 846.43M | 790.91M |
| Gross Profit | 430.31M | 367.43M | 989.12M | 363.38M | 530.35M | 483.77M |
| EBITDA | 329.83M | 358.02M | 424.26M | 217.54M | 263.34M | 259.87M |
| Net Income | 118.92M | 128.21M | 190.81M | 51.91M | 96.01M | 101.13M |
Balance Sheet | ||||||
| Total Assets | 5.78B | 5.67B | 5.18B | 4.70B | 3.95B | 3.62B |
| Cash, Cash Equivalents and Short-Term Investments | 103.74M | 51.82M | 50.12M | 84.97M | 85.03M | 78.38M |
| Total Debt | 1.70B | 1.62B | 1.40B | 1.25B | 1.14B | 1.10B |
| Total Liabilities | 3.99B | 3.98B | 3.54B | 3.27B | 2.62B | 2.45B |
| Stockholders Equity | 1.79B | 1.69B | 1.64B | 1.43B | 1.32B | 1.17B |
Cash Flow | ||||||
| Free Cash Flow | -222.82M | -214.43M | -179.93M | -165.93M | -83.98M | -61.48M |
| Operating Cash Flow | 313.53M | 302.56M | 290.87M | 217.82M | 243.77M | 231.72M |
| Investing Cash Flow | -539.70M | -520.14M | -474.87M | -389.42M | -335.52M | -300.87M |
| Financing Cash Flow | 239.78M | 219.26M | 194.72M | 171.54M | 96.12M | 104.68M |
California Water Service Technical Analysis
Positive
50.72
Price Trends
47.39
Positive
45.93
Positive
45.28
Positive
Market Momentum
1.19
Positive
61.70
Neutral
48.20
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 50.72 is above the 20-day moving average (MA) of 50.46, above the 50-day MA of 47.39, and above the 200-day MA of 45.28, indicating a bullish trend. The MACD of 1.19 indicates Positive momentum. The RSI at 61.70 is Neutral, neither overbought nor oversold. The STOCH value of 48.20 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for CWT.
California Water Service Risk Analysis
California Water Service disclosed 39 risk factors in its most recent earnings report. California Water Service 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
California Water Service Peers Comparison
UnderperformOutperform
Sector (66)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
66 Neutral | $26.96B | 24.43 | 10.14% | 2.51% | 8.10% | 2.89% | |
66 Neutral | $17.65B | 18.10 | 5.60% | 3.62% | 6.62% | 11.55% | |
64 Neutral | $3.14B | 26.25 | 6.96% | 2.50% | 4.20% | -12.47% | |
64 Neutral | $3.45B | 25.67 | 13.06% | 2.33% | 11.68% | 5.79% | |
63 Neutral | $1.08B | 23.91 | 9.07% | 2.53% | 1.76% | -0.20% | |
61 Neutral | $11.55B | 20.66 | 8.16% | 3.46% | 13.07% | -11.65% | |
58 Neutral | $517.24M | 21.71 | 8.89% | 2.90% | 4.38% | 7.70% |
* Utilities Sector Average
CWT
California Water Service
51.73
8.09
18.53%
AWR
American States Water
87.86
16.31
22.80%
AWK
American Water
138.09
2.02
1.49%
WTRG
Essential Utilities
40.70
5.08
14.27%
MSEX
Middlesex Water Company
57.25
6.66
13.17%
YORW
The York Water Company
31.55
1.73
5.79%
California Water Service Corporate Events
Dividends
California Water Service Declares 326th Consecutive Dividend
Positive
Jul 29, 2026
On July 29, 2026, California Water Service Group’s Board of Directors declared the company’s 326th consecutive quarterly dividend, underscoring its long-standing record of consistent shareholder returns and financial stability.The divi...
Executive/Board ChangesShareholder Meetings
California Water Service Shareholders Back Board, Pay, Auditor
Positive
May 21, 2026
At its Annual Meeting of Stockholders held on May 20, 2026, California Water Service Group shareholders elected all 11 director nominees to serve until the 2027 annual meeting, signaling continued support for the company’s current board comp...
Business Operations and StrategyExecutive/Board Changes
California Water Service Announces Key Leadership Promotions
Positive
May 20, 2026
On May 20, 2026, California Water Service Group’s board approved the promotion of longtime employee Tamara S. Johnson to the newly created role of Vice President, California Operations, effective July 1, 2026. Johnson, who has four decades o...
Business Operations and StrategyRegulatory Filings and Compliance
California Water Service Wins CPUC Rate Case Approval
Positive
May 1, 2026
California Water Service, the largest subsidiary of California Water Service Group, received a final decision on April 30, 2026 from the California Public Utilities Commission on its 2024 General Rate Case and Infrastructure Improvement Plan, conc...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.