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California Water Service (CWT)
NYSE:CWT

California Water Service (CWT) AI Stock Analysis

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California Water Service

(NYSE:CWT)

Rating:63Neutral
Price Target:
$49.00
â–²(5.97%Upside)
The overall score reflects a stable financial performance with strong profitability and growth potential, albeit with challenges in cash flow management. Technical analysis signals are mixed, showing potential bearish trends. Valuation is fair, supported by a reasonable P/E ratio and an attractive dividend yield. The recent earnings call and corporate events indicate positive developments, though some challenges remain.

California Water Service (CWT) vs. SPDR S&P 500 ETF (SPY)

California Water Service Business Overview & Revenue Model

Company DescriptionCalifornia Water Service (CWT) is one of the largest investor-owned American water utilities, providing high-quality water and wastewater services to millions of people across California, Washington, New Mexico, and Hawaii. Operating primarily in the regulated utilities sector, the company focuses on delivering safe, reliable, and affordable water services to residential, commercial, and industrial customers. Established in 1926, California Water Service is committed to sustainability, infrastructure investment, and customer satisfaction.
How the Company Makes MoneyCalifornia Water Service makes money primarily through the provision of water and wastewater services. Its revenue model is based on collecting fees for the water services delivered to its customers, which include residential, commercial, and industrial users. Rates for these services are regulated by state public utility commissions, which approve pricing structures based on the costs of service delivery, infrastructure maintenance, and investment needs. Additionally, the company earns revenue through various infrastructure improvement projects, which are often funded through government programs or partnerships, allowing the company to upgrade its systems and ensure compliance with environmental and safety standards. The company's financial performance is significantly influenced by regulatory decisions, operational efficiency, and effective management of water resources.

California Water Service Earnings Call Summary

Earnings Call Date:May 01, 2025
(Q1-2025)
|
% Change Since: -8.14%|
Next Earnings Date:Jul 24, 2025
Earnings Call Sentiment Positive
The earnings call presented a strong performance for the first quarter, with significant revenue and net income growth on a non-GAAP basis, major capital investments, and favorable regulatory outcomes. However, the inability to reach a settlement in the California General Rate Case and the drop in revenue and net income on a GAAP basis compared to the prior year temper the positive news.
Q1-2025 Updates
Positive Updates
Strong First Quarter Performance
California Water Service Group reported a surprisingly strong first quarter despite it being a typically challenging period. Operating revenue increased 13% over non-GAAP 2024 revenue of $180.5 million. Net income and diluted earnings per share increased 225% and 214%, respectively, over Q1 2024 non-GAAP income and earnings per share.
Significant Capital Investments
The company reported capital investments during the quarter totaling $110.1 million, maintaining the record pace set in Q1 2024.
Regulatory Progress and Rate Increases
There were several favorable regulatory decisions, including a $27.2 million revenue requirement increase in California and a $1.1 million revenue increase in Hawaii. The Palos Verdes project received approval for $14.2 million incremental capital costs and a temporary surcharge for $3.8 million in carrying costs.
Dividend Increase
The Board of Directors approved a 321st consecutive quarterly dividend, increasing the annual dividend by 10.7% to $1.24 per share.
Healthy Water Supply Outlook
California reported a 99% normal snowpack, with major reservoirs above historical averages, indicating no significant water supply issues anticipated in the summer months.
Negative Updates
Revenue and Net Income Comparison to Prior Year
On a GAAP basis, operating revenue for the quarter was $204 million compared to $270.7 million in the first quarter of 2024. Net income attributed to the group was $13.3 million compared to $69.9 million in Q1 2024.
Challenges in Reaching Settlement in California GRC
The company was unable to reach a global settlement with the California Public Advocates regarding the 2021 General Rate Case, highlighting ongoing challenges in regulatory negotiations.
Company Guidance
During the California Water Service Group's first-quarter 2025 earnings call, several financial metrics and guidance points were highlighted. The company reported a GAAP operating revenue of $204 million compared to $270.7 million in the first quarter of 2024. Net income attributed to the group was $13.3 million or $0.22 per diluted share, down from $69.9 million or $1.21 per diluted share in Q1 of 2024. Adjusting for the Q1 2024 interim rate relief, first-quarter revenue increased 13% over non-GAAP 2024 revenue of $180.5 million, while net income and diluted earnings per share rose by 225% and 214%, respectively, over Q1 2024's non-GAAP income metrics. The company also invested $110.1 million in capital during the quarter and expects a compounded annual rate base growth of approximately 11.7%, contingent on the outcome of their 2024 general rate case in California. Additionally, the company maintained a strong liquidity profile with $44.5 million in unrestricted cash and $315 million available on credit lines. The board declared a quarterly dividend of $0.30 per share, marking the 321st consecutive quarterly dividend.

California Water Service Financial Statement Overview

Summary
California Water Service demonstrates financial stability with consistent revenue growth and strong profitability margins. However, the decline in net profit margin and negative free cash flow highlight areas for potential improvement. The company's strong equity and reduced leverage are positive, but cash flow sustainability needs attention.
Income Statement
65
Positive
California Water Service shows a stable income statement with a consistent gross profit margin of approximately 61.8% in TTM (Trailing-Twelve-Months). However, the net profit margin decreased to 13.8% from 18.4% in the previous year. Revenue growth is evident with a 21.9% increase from 2023 to 2024, but the recent TTM figure indicates a slight decline. EBIT and EBITDA margins are healthy at 18.4% and 35.5% respectively, suggesting operational efficiency.
Balance Sheet
70
Positive
The balance sheet reflects a strong equity base with an equity ratio of 31.0% in TTM. The debt-to-equity ratio has significantly improved to 0.04, indicating reduced leverage. Return on equity (ROE) is robust at 8.2% for TTM, although slightly lower than the previous year. The company maintains a conservative financial structure, minimizing risks associated with high leverage.
Cash Flow
60
Neutral
Cash flow analysis reveals challenges in free cash flow management, with a free cash flow of -$58.2 million in TTM, though improved from the previous period. The operating cash flow to net income ratio stands at 2.26, signifying a strong operational cash generation capability. However, the free cash flow to net income ratio remains negative, indicating the need for better capital expenditure management.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue970.03M1.04B794.63M846.43M790.91M794.31M
Gross Profit532.30M989.12M363.38M529.45M483.84M489.55M
EBITDA351.41M424.26M217.54M262.72M250.83M244.00M
Net Income134.22M190.81M51.91M96.01M101.13M96.83M
Balance Sheet
Total Assets5.26B5.18B4.60B3.85B3.62B3.39B
Cash, Cash Equivalents and Short-Term Investments44.46M50.12M39.59M62.10M78.38M44.55M
Total Debt1.46B1.38B1.25B1.13B1.10B1.16B
Total Liabilities3.63B3.54B3.17B2.53B2.44B2.47B
Stockholders Equity1.63B1.64B1.43B1.32B1.18B921.34M
Cash Flow
Free Cash Flow-168.32M-179.93M-165.93M-83.98M-61.48M-180.73M
Operating Cash Flow302.77M290.87M217.82M243.77M231.72M117.92M
Investing Cash Flow-474.96M-474.87M-389.42M-335.52M-300.87M-346.07M
Financing Cash Flow174.06M194.72M171.54M96.12M104.68M229.98M

California Water Service Technical Analysis

Technical Analysis Sentiment
Neutral
Last Price46.24
Price Trends
50DMA
47.30
Negative
100DMA
47.06
Negative
200DMA
47.82
Negative
Market Momentum
MACD
-0.30
Negative
RSI
48.35
Neutral
STOCH
44.36
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CWT, the sentiment is Neutral. The current price of 46.24 is above the 20-day moving average (MA) of 46.17, below the 50-day MA of 47.30, and below the 200-day MA of 47.82, indicating a neutral trend. The MACD of -0.30 indicates Negative momentum. The RSI at 48.35 is Neutral, neither overbought nor oversold. The STOCH value of 44.36 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for CWT.

California Water Service Risk Analysis

California Water Service disclosed 38 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

Overall Rating
UnderperformOutperform
Sector (67)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
72
Outperform
$1.01B23.429.80%2.42%16.02%18.29%
HTHTO
70
Outperform
$1.82B17.897.49%3.15%12.34%11.78%
69
Neutral
$350.23M16.339.04%3.62%8.31%21.97%
67
Neutral
$16.54B17.064.47%3.55%4.77%6.10%
AWAWR
66
Neutral
$2.98B23.8713.95%2.40%6.79%5.96%
CWCWT
63
Neutral
$2.77B20.418.67%2.58%3.83%-8.75%
58
Neutral
$465.42M23.638.63%2.71%3.45%-19.90%
* Utilities Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
CWT
California Water Service
46.24
-1.52
-3.18%
AWR
American States Water
77.39
6.42
9.05%
ARTNA
Artesian Resources
33.81
-2.28
-6.32%
MSEX
Middlesex Water Company
55.89
3.18
6.03%
HTO
H2O America
53.14
0.44
0.83%
YORW
The York Water Company
32.12
-3.78
-10.53%

California Water Service Corporate Events

Executive/Board ChangesShareholder Meetings
California Water Service Holds Annual Stockholders Meeting
Positive
May 29, 2025

On May 28, 2025, California Water Service Group held its Annual Meeting of Stockholders, where several key decisions were made. Stockholders elected directors to serve until the 2026 meeting, approved the compensation for named executive officers, and ratified the appointment of Deloitte & Touche LLP as the independent registered public accounting firm for 2025. These actions are expected to influence the company’s governance and financial oversight positively.

The most recent analyst rating on (CWT) stock is a Buy with a $58.00 price target. To see the full list of analyst forecasts on California Water Service stock, see the CWT Stock Forecast page.

Private Placements and FinancingBusiness Operations and Strategy
California Water Service Announces Equity Distribution Agreement
Neutral
May 15, 2025

On May 14, 2025, California Water Service Group announced an equity distribution agreement with several financial institutions to sell up to $350 million in common stock through an at-the-market equity program. This initiative allows the company to raise capital for general corporate purposes, including working capital and investments, by selling shares at prevailing market prices or through negotiated transactions. The agreement also includes provisions for forward sale agreements, where the company may settle in cash or shares, impacting its financial strategy and stakeholder interests.

The most recent analyst rating on (CWT) stock is a Buy with a $54.00 price target. To see the full list of analyst forecasts on California Water Service stock, see the CWT Stock Forecast page.

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.Date of analysis: Jun 26, 2025