H2o America (HTO)
NASDAQ:HTO
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H2O America
(NASDAQ:HTO)
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Rating:65Neutral
Price Target:
$61.00
â–²(5.08% Upside)
Action:Reiterated
Date:05/20/26
The score is driven primarily by stable but capex-heavy financial performance (cash flow and historical leverage are the main constraints) and a constructive earnings outlook with reiterated guidance and strengthened financing. These positives are tempered by soft near-term technical momentum and a premium P/E that limits valuation support despite a ~3% dividend yield.
Positive Factors
Stable regulated revenues & margins
Consistent revenue expansion and steady ~12–13% net margins reflect a predictable, rate‑regulated cash flow model. This stability underpins durable earnings quality and supports multi-year planning, reducing earnings volatility versus nonregulated peers and aiding long-term credit profile resilience.
Negative Factors
Historically negative free cash flow
Persistent negative free cash flow through 2025 reflects heavy, ongoing capex typical of water utilities and constrains internal funding for growth or debt reduction. Though TTM FCF turned modestly positive, it remains small relative to net income, limiting self‑funding and elevating reliance on external capital.
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Positive Factors
Negative Factors
Stable regulated revenues & margins
Consistent revenue expansion and steady ~12–13% net margins reflect a predictable, rate‑regulated cash flow model. This stability underpins durable earnings quality and supports multi-year planning, reducing earnings volatility versus nonregulated peers and aiding long-term credit profile resilience.
Read all positive factors
H2O America (HTO) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$2.38B
Dividend Yield3.4%
Average Volume (3M)585.66K
Price to Earnings (P/E)29.3
Beta (1Y)0.02
Revenue Growth6.47%
EPS Growth-1.90%
CountryUS
Employees822
SectorUtilities
Sector Strength65
IndustryRegulated Water
Share Statistics
EPS (TTM)2.93
Shares Outstanding41,840,250
10 Day Avg. Volume437,935
30 Day Avg. Volume585,657
Financial Highlights & Ratios
PEG Ratio3.69
Price to Book (P/B)1.14
Price to Sales (P/S)2.20
P/FCF Ratio-6.32
Enterprise Value/Market Cap1.56
Enterprise Value/Revenue4.55
Enterprise Value/Gross Profit8.20
Enterprise Value/Ebitda12.09
Forecast
1Y Price Target
$62.67Price Target Upside7.95% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering6
EPS Forecast (FY)2.75
Revenue Forecast (FY)$884.16M
H2O America Business Overview & Revenue Model
Company Description
H2O America, through its subsidiaries, provides water utility and other related services in the United States. The company engages in the production, purchase, storage, purification, distribution, wholesale, and retail sale of water and wastewater...
How the Company Makes Money
null...
H2O America Earnings Call Summary
Earnings Call Date:Apr 28, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:Jul 23, 2026
Earnings Call Sentiment Positive
The call emphasized several strong strategic and financial positives: a very successful $700M equity raise, underlying net income growth of ~15%, reaffirmed full-year guidance, a detailed $2.7B five-year capital plan with ~80% expected to qualify for regulatory recovery, and concrete progress on QuadVest and other regulatory filings. Offsetting items include EPS dilution from a higher share count leaving EPS flat despite net income growth, rising operating and water production costs, significant near-term project costs (PFAS remediation, Texas investments), and timing/regulatory risk around the QuadVest closing and future Texas rate cases. On balance, the highlights — particularly the oversubscribed equity financing, strong liquidity, affirmed guidance, and visible regulatory recovery mechanisms — materially outweigh the headwinds.Positive Updates
Quarterly EPS and Underlying Net Income Growth
GAAP diluted EPS of $0.49 and adjusted diluted EPS of $0.50 for Q1 2026; underlying net income grew roughly 15% year-over-year but EPS was unchanged versus 2025 due to higher share count.
Negative Updates
EPS Neutral Despite Net Income Growth Due to Dilution
Although underlying net income rose ~15% YoY, reported and adjusted EPS were flat versus 2025 due to higher share count from ATM program and March equity issuance; Ann quantified dilution at roughly $0.07 per share.
Read all updates
Q1-2026 Updates
Positive
Negative
Quarterly EPS and Underlying Net Income Growth
GAAP diluted EPS of $0.49 and adjusted diluted EPS of $0.50 for Q1 2026; underlying net income grew roughly 15% year-over-year but EPS was unchanged versus 2025 due to higher share count.
Read all positive updates
Company Guidance
H2O America reiterated standalone 2026 EPS guidance of $3.08–$3.18 (Q1 GAAP diluted EPS $0.49; adjusted $0.50) and reiterated its 2026–2030 plan targeting a 6%–8% long‑term organic EPS CAGR (non‑linear, aiming at or above the top end using 2025 adjusted EPS of $2.99 as the base), with QuadVest accretion expected beginning in 2028. Management expects full‑year 2026 CapEx of $483 million (Q1 spend $85 million, 18% of the year) and a five‑year 2026–2030 capital plan of $2.7 billion (roughly 80% qualifying for timely regulatory recovery), driving an estimated 13% rate‑base CAGR off a year‑end 2025 rate base of $2.8 billion. Financing posture: a $700 million equity raise (upsized from $550 million, >5x oversubscribed, priced at a 2.6% discount) including a $400 million forward agreement available through 2027, intent to stay out of equity markets through at least YE2027, and anticipated debt issuance of $100–$200 million to fund QuadVest; liquidity includes $370 million in available bank lines and cash equivalents, S&P A‑ rating affirmed, and expected FFO‑to‑debt of ~11%–12% through 2027 (above the 11% downgrade threshold), rising to >12% in 2028 with a longer‑term target toward ~15%+ (A‑flat). Transaction and regulatory timing: QuadVest ratemaking FMV cited at $483.6 million with an expected close in H2 2026, QuadVest active connections >57,200 (up 5% Q1 and 16% in 2025; pipeline net +5,000 YTD despite converting 2,800), Texas share of customers projected to rise from 8% today to 26% by 2029, a combined Texas GRC to be filed early 2027 with new rates effective early 2028, and remaining regulatory items highlighted (e.g., SJWC Williams Station PFAS ion‑exchange capex ~$176M; CT GRC seeks ≈$26M annual revenue to recover ≈$129M of investments; ME GRC requests $9.5M to recover ≈$36M).H2O America Financial Statement Overview
Summary
Income Statement
78
Positive
Balance Sheet
70
Positive
Cash Flow
55
Neutral
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 816.28M | 800.59M | 748.44M | 670.36M | 620.70M | 573.69M |
| Gross Profit | 452.65M | 374.11M | 425.12M | 388.43M | 357.17M | 318.57M |
| EBITDA | 307.21M | 321.33M | 289.38M | 265.23M | 246.82M | 219.66M |
| Net Income | 105.04M | 102.58M | 93.97M | 84.99M | 73.83M | 60.48M |
Balance Sheet | ||||||
| Total Assets | 5.35B | 5.15B | 4.66B | 4.35B | 3.76B | 3.49B |
| Cash, Cash Equivalents and Short-Term Investments | 153.01M | 20.69M | 11.11M | 9.72M | 12.34M | 10.91M |
| Total Debt | 1.87B | 1.98B | 1.83B | 1.75B | 1.66B | 1.60B |
| Total Liabilities | 3.52B | 3.61B | 3.29B | 3.11B | 2.64B | 2.46B |
| Stockholders Equity | 1.83B | 1.54B | 1.37B | 1.23B | 1.11B | 1.03B |
Cash Flow | ||||||
| Free Cash Flow | -437.82M | -278.10M | -185.11M | -99.89M | -78.04M | -123.77M |
| Operating Cash Flow | 245.33M | 244.80M | 195.53M | 190.83M | 166.20M | 130.04M |
| Investing Cash Flow | -528.27M | -520.10M | -340.10M | -322.27M | -244.33M | -260.00M |
| Financing Cash Flow | 412.26M | 284.87M | 145.96M | 128.82M | 78.35M | 132.81M |
H2O America Technical Analysis
Neutral
58.05
Price Trends
57.57
Negative
54.92
Positive
51.19
Positive
Market Momentum
-0.44
Positive
45.54
Neutral
27.55
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HTO, the sentiment is Neutral. The current price of 58.05 is above the 20-day moving average (MA) of 57.39, above the 50-day MA of 57.57, and above the 200-day MA of 51.19, indicating a neutral trend. The MACD of -0.44 indicates Positive momentum. The RSI at 45.54 is Neutral, neither overbought nor oversold. The STOCH value of 27.55 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for HTO.
H2O America Risk Analysis
H2O America disclosed 42 risk factors in its most recent earnings report. H2O America 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
H2O America Peers Comparison
UnderperformOutperform
Sector (66)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
67 Neutral | $2.80B | 48.96 | 2.54% | 2.62% | -4.18% | -41.43% | |
66 Neutral | $17.65B | 18.10 | 5.60% | 3.62% | 6.62% | 11.55% | |
65 Neutral | $2.38B | 29.26 | 6.60% | 3.40% | 6.47% | -1.90% | |
64 Neutral | $2.98B | 24.69 | 13.06% | 2.64% | 11.68% | 5.79% | |
63 Neutral | $954.68M | 22.58 | 9.07% | 2.67% | 1.76% | -0.20% | |
55 Neutral | $2.59B | 167.62 | 6.96% | 2.88% | 4.20% | -12.47% |
* Utilities Sector Average
HTO
H2O America
56.91
5.97
11.73%
AWR
American States Water
75.96
-0.38
-0.49%
CWT
California Water Service
43.34
-2.75
-5.97%
MSEX
Middlesex Water Company
51.26
-5.23
-9.25%
WTTR
Select Energy Services
19.90
12.01
152.25%
ARIS
Aris Mining
17.51
11.23
178.82%
H2O America Corporate Events
Business Operations and StrategyExecutive/Board ChangesShareholder Meetings
H2O America Shareholders Reaffirm Board and Governance Policies
Positive
May 19, 2026
At its May 13, 2026 stockholders’ meeting, H2O America shareholders elected nine directors to the board and approved, on an advisory basis, the compensation of the company’s named executive officers as presented in its 2026 proxy mater...
Business Operations and StrategyM&A TransactionsPrivate Placements and Financing
H2O America Prices Equity Offering to Fund Acquisition
Neutral
Mar 4, 2026
On March 2 and 3, 2026, H2O America launched and priced an underwritten public equity offering of 11,484,824 common shares, later expanded by a 1,722,723-share overallotment option fully exercised by underwriters. The structure includes forward sa...
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.