H2O America (HTO)
NASDAQ:HTO
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H2O America
(NASDAQ:HTO)
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Rating:67Neutral
Price Target:
$64.00
â–²(8.14% Upside)
Action:ReiteratedDate:02/27/26
The score is primarily constrained by lower visibility into normalized operating performance given the unusual 2025 income statement mix, despite improved leverage and a sharp free-cash-flow swing. Technicals are supportive with a clear uptrend, and valuation is reasonable with a solid dividend yield. Earnings-call messaging is constructive (higher long-term growth target and regulatory wins) but tempered by near-term dilution risk and elevated cost/capex funding requirements.
Positive Factors
Regulatory wins and cost recovery
Secured first‑in‑nation PFAS cost recovery and other regulatory/legislative changes that materially improve timely rate recognition and recovery of remediation costs. Durable regulatory mechanisms reduce cash‑flow volatility and support allowed returns over multi‑year rate cycles.
Negative Factors
2025 income‑statement anomaly and earnings quality
The large 2025 revenue drop and negative gross profit alongside an outsized net margin point to one‑offs or non‑operating drivers. This erodes visibility into normalized operating performance and complicates forecasts and regulatory/credit assessments over the next several quarters.
Read all positive and negative factors
Positive Factors
Negative Factors
Regulatory wins and cost recovery
Secured first‑in‑nation PFAS cost recovery and other regulatory/legislative changes that materially improve timely rate recognition and recovery of remediation costs. Durable regulatory mechanisms reduce cash‑flow volatility and support allowed returns over multi‑year rate cycles.
Read all positive factors
H2O America (HTO) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$2.48B
Dividend Yield3.4%
Average Volume (3M)691.87K
Price to Earnings (P/E)17.1
Beta (1Y)0.05
Revenue Growth11.39%
EPS Growth13.86%
CountryUS
Employees822
SectorUtilities
Sector Strength65
IndustryRegulated Water
Share Statistics
EPS (TTM)0.45
Shares Outstanding41,824,863
10 Day Avg. Volume689,417
30 Day Avg. Volume691,868
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 Cap1.64
Enterprise Value/Revenue5.06
Enterprise Value/Gross Profit9.27
Enterprise Value/Ebitda13.26
Forecast
1Y Price Target
$62.50Price Target Upside5.61% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering4
EPS Forecast (FY)2.9
Revenue Forecast (FY)$885.65M
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:Feb 25, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 29, 2026
Earnings Call Sentiment Positive
The call emphasized strong operational execution, record capital deployment, regulatory and legislative wins (including PFAS recovery mechanism in Connecticut), an upgraded long-term EPS growth target (6%–8%), and a transformative acquisition that materially expands growth prospects in Texas. These positives were tempered by near-term headwinds: elevated operating and water supply costs, higher PFAS remediation estimates, significant financing requirements (equity/debt) tied to Quadvest that create potential EPS dilution in 2026–2027, and tax/credit metrics that require careful balance. Overall, the company conveyed confidence in translating elevated CapEx and regulatory outcomes into longer-term earnings growth while acknowledging near-term dilution and cost pressures.Positive Updates
Solid 2025 EPS Performance
Reported full-year 2025 diluted EPS of $2.92 and adjusted (non-GAAP) diluted EPS of $2.99, up from $2.87 and $2.95 in 2024 respectively (adjusted EPS increased by $0.04 year-over-year), and near the top end of the upwardly narrowed 2025 guidance range.
Negative Updates
Near-Term EPS Dilution from Quadvest Financing and Rate Lag
Quadvest acquisition expected to be initially dilutive to consolidated EPS (prior to rate implementation), with potential dilution in the 10%–20% range versus the stand-alone plan in 2026–2027; accretion is expected beginning in 2028 depending on timing and regulatory outcomes.
Read all updates
Q4-2025 Updates
Positive
Negative
Solid 2025 EPS Performance
Reported full-year 2025 diluted EPS of $2.92 and adjusted (non-GAAP) diluted EPS of $2.99, up from $2.87 and $2.95 in 2024 respectively (adjusted EPS increased by $0.04 year-over-year), and near the top end of the upwardly narrowed 2025 guidance range.
Read all positive updates
Company Guidance
Management gave 2026 stand‑alone adjusted diluted EPS guidance of $3.08–$3.18 (excludes Quadvest/Cibolo), based on $483M of 2026 CapEx and a planned $100–125M equity raise to fund stand‑alone spending; 2025 adjusted EPS was $2.99 (GAAP $2.92) and 2025 CapEx was $501M (vs. budget $486M), up 41% vs. 2024. They rolled forward a 2026–2030 CapEx plan of $2.7B (a 31% increase vs. the prior 5‑year plan), expect ~80% timely rate recognition, and see consolidated rate base rising from ~ $2.8B at year‑end 2025 to $5.1B by year‑end 2030 (13% CAGR). Long‑term nonlinear EPS growth target was raised to 6%–8% CAGR (anchored to 2025 adjusted EPS of $2.99) with a near‑term expectation to be at or above the top end for 2026–2030; the pending Quadvest transaction (total consideration $540M, rate‑making rate base $483.6M, >54,400 connections) may be 10%–20% dilutive to consolidated EPS in 2026–27 before becoming accretive in 2028, with a mid‑2026 close anticipated. Financing plans for Quadvest include $100–200M of debt and $350–450M of equity/equity‑like instruments (company liquidity includes $370M bank lines and ATM proceeds of $123M in 2025); FFO/debt was 11.2% in 2025 and is expected to be ~11%–12% through 2027 and >12% in 2028. The Board raised the 2026 annualized dividend 4.8% to $1.76 (from $1.68), the 58th consecutive annual increase.H2O America Financial Statement Overview
Summary
Income Statement
54
Neutral
Balance Sheet
63
Positive
Cash Flow
58
Neutral
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 800.59M | 748.44M | 670.36M | 620.70M | 573.69M |
| Gross Profit | 374.11M | 425.12M | 388.43M | 357.17M | 318.57M |
| EBITDA | 321.33M | 289.38M | 265.23M | 246.82M | 219.66M |
| Net Income | 102.58M | 93.97M | 84.99M | 73.83M | 60.48M |
Balance Sheet | |||||
| Total Assets | 2.15B | 4.66B | 4.35B | 3.76B | 3.49B |
| Cash, Cash Equivalents and Short-Term Investments | 175.00K | 11.11M | 9.72M | 12.34M | 10.91M |
| Total Debt | 1.98B | 1.83B | 1.75B | 1.66B | 1.60B |
| Total Liabilities | 611.04M | 3.29B | 3.11B | 2.64B | 2.46B |
| Stockholders Equity | 1.54B | 1.37B | 1.23B | 1.11B | 1.03B |
Cash Flow | |||||
| Free Cash Flow | -278.10M | -185.11M | -99.89M | -78.04M | -123.77M |
| Operating Cash Flow | 244.80M | 195.53M | 190.83M | 166.20M | 130.04M |
| Investing Cash Flow | -520.10M | -340.10M | -322.27M | -244.33M | -260.00M |
| Financing Cash Flow | 284.87M | 145.96M | 128.82M | 78.35M | 132.81M |
H2O America Technical Analysis
Positive
59.18
Price Trends
55.19
Positive
51.74
Positive
50.23
Positive
Market Momentum
0.93
Negative
63.44
Neutral
80.49
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HTO, the sentiment is Positive. The current price of 59.18 is above the 20-day moving average (MA) of 57.69, above the 50-day MA of 55.19, and above the 200-day MA of 50.23, indicating a bullish trend. The MACD of 0.93 indicates Negative momentum. The RSI at 63.44 is Neutral, neither overbought nor oversold. The STOCH value of 80.49 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 | $2.48B | 17.14 | 6.92% | 3.40% | 11.39% | 13.86% | |
67 Neutral | $996.48M | 26.96 | 9.08% | 2.67% | 6.24% | 3.35% | |
66 Neutral | $17.65B | 18.10 | 5.60% | 3.62% | 6.62% | 11.55% | |
65 Neutral | $3.03B | 21.42 | 13.10% | 2.64% | 10.28% | 13.56% | |
61 Neutral | $2.08B | 50.49 | 2.65% | 2.62% | -4.60% | -67.28% | |
58 Neutral | $2.76B | 20.13 | 7.68% | 2.88% | -2.60% | -33.78% |
* Utilities Sector Average
HTO
H2O America
59.18
9.60
19.35%
AWR
American States Water
77.59
4.13
5.63%
CWT
California Water Service
46.25
>-0.01
>-0.01%
MSEX
Middlesex Water Company
53.80
-6.24
-10.39%
WTTR
Select Energy Services
15.18
7.04
86.56%
ARIS
Aris Mining
19.31
15.03
351.17%
H2O America Corporate Events
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.