H2O America (HTO) AI Stock Analysis

• Market Cap: $1.68B
• Dividend Yield: 3.54%
• Average Volume (3M): 345.74K
• Price to Earnings (P/E): 14.9
• Beta (1Y): 0.06
• Revenue Growth: 11.39%
• EPS Growth: 13.86%
• Country: US
• Employees: 822
• Sector: Utilities
• Sector Strength: 65
• Industry: Regulated Water
• EPS (TTM): 1.27
• Shares Outstanding: 35,805,088
• 10 Day Avg. Volume: 417,068
• 30 Day Avg. Volume: 345,741
• PEG Ratio: 4.30
• Price to Book (P/B): 1.21
• Price to Sales (P/S): 2.21
• P/FCF Ratio: -8.93
• Enterprise Value/Market Cap: 2.16
• Enterprise Value/Revenue: 4.51
• Enterprise Value/Gross Profit: 7.87
• Enterprise Value/Ebitda: 11.54
• 1Y Price Target: $59.00
• Price Target Upside: 25.91% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 2
• EPS Forecast (FY): 2.97
• Revenue Forecast (FY): $804.06M

• Rating: 67 Neutral
• Price Target: $54.00 ▲(15.24% Upside)

H2O America's overall stock score reflects strong financial performance and strategic growth initiatives, tempered by challenges in cash flow management and regulatory uncertainties. The valuation is fair, and technical indicators suggest potential for upward momentum.

Positive Factors

Strategic Acquisition

The acquisition expands H2O America's presence in Texas, enhancing its operational scale and positioning it as a leading water utility in the region.

Revenue Growth

Consistent revenue growth indicates strong market demand and effective sales strategies, supporting long-term business expansion.

Profitability

High profitability margins reflect efficient operations and pricing power, contributing to sustainable financial health.

Negative Factors

Negative Free Cash Flow

Negative free cash flow suggests potential liquidity challenges, which could hinder investment in growth opportunities and financial flexibility.

Leverage

Moderate leverage may limit the company's ability to take on additional debt for expansion, impacting long-term growth potential.

Slowing Growth Rate

A slowing growth rate could indicate market saturation or increased competition, potentially impacting future revenue expansion.

H2O America Business Overview & Revenue Model

Company Description

H2O America (HTO) is a leading provider of innovative water filtration and purification solutions, catering primarily to residential, commercial, and industrial sectors. The company specializes in a range of products including water filtration systems, reverse osmosis units, and water softeners, designed to improve water quality and safety. H2O America is committed to sustainability and aims to provide accessible clean water solutions while promoting environmental responsibility.

How the Company Makes Money

H2O America generates revenue through multiple streams, primarily by selling its water filtration and purification products directly to consumers and businesses. The company also offers installation and maintenance services, which provide a recurring revenue opportunity. Additionally, H2O America may engage in partnerships with retailers and distributors to expand its market reach, leveraging these relationships to drive sales. The company may also explore subscription-based models for filter replacements and maintenance services, ensuring steady cash flow while fostering customer loyalty.

H2O America Financial Statement Overview

Summary

H2O America demonstrates strong profitability and revenue growth, supported by efficient operations. However, challenges with negative free cash flow and moderate leverage persist. Continued focus on improving cash flow and managing debt levels is crucial for sustaining financial health.

Income Statement

H2O America shows consistent revenue growth with a TTM increase of 2.88%. The company maintains strong profitability with a gross profit margin of 56.73% and a net profit margin of 13.03%. EBIT and EBITDA margins are healthy at 23.56% and 38.37% respectively, indicating efficient operations. However, the growth rate has slowed compared to previous years, which could be a concern if the trend continues.

Balance Sheet

The company's debt-to-equity ratio is 1.28, reflecting a moderate level of leverage, which has improved from previous years. Return on equity is stable at 7.39%, but there is room for improvement. The equity ratio stands at 30.24%, suggesting a balanced capital structure, though slightly lower than ideal for the industry.

Cash Flow

Operating cash flow is positive, but the free cash flow remains negative, with a TTM free cash flow to net income ratio of -1.15. While there is a positive growth in free cash flow, the negative figures indicate potential liquidity challenges. The operating cash flow to net income ratio of 0.63 suggests adequate cash generation relative to net income, but improvements are needed in free cash flow management.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	804.22M	748.44M	670.36M	620.70M	573.69M	564.53M
Gross Profit	460.81M	425.12M	388.43M	357.17M	318.57M	316.58M
EBITDA	314.19M	289.38M	265.23M	246.82M	219.66M	215.77M
Net Income	109.28M	93.97M	84.99M	73.83M	60.48M	61.52M
Balance Sheet
Total Assets	0.00	4.66B	4.35B	3.76B	3.49B	3.31B
Cash, Cash Equivalents and Short-Term Investments	0.00	11.11M	9.72M	12.34M	10.91M	5.27M
Total Debt	18.01M	1.83B	1.75B	1.66B	1.60B	1.54B
Total Liabilities	607.12M	3.29B	3.11B	2.64B	2.46B	2.39B
Stockholders Equity	1.52B	1.37B	1.23B	1.11B	1.03B	917.16M
Cash Flow
Free Cash Flow	115.42M	-185.11M	-99.89M	-78.04M	-123.77M	-110.92M
Operating Cash Flow	222.74M	195.53M	190.83M	166.20M	130.04M	104.05M
Investing Cash Flow	-476.96M	-340.10M	-322.27M	-244.33M	-260.00M	-214.26M
Financing Cash Flow	261.56M	145.96M	128.82M	78.35M	132.81M	101.53M

H2O America Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 46.86
• 50DMA: Positive
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: 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 46.86 is above the 20-day moving average (MA) of 46.43, below the 50-day MA of 47.42, and below the 200-day MA of 50.13, indicating a neutral trend. The MACD of -0.34 indicates Negative momentum. The RSI at 55.43 is Neutral, neither overbought nor oversold. The STOCH value of 81.87 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for HTO.

H2O America Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
AWR	73 Outperform	$2.82B	21.60	13.73%	2.64%	10.28%	13.56%
HTO	67 Neutral	$1.68B	14.89	7.65%	3.54%	11.39%	13.86%
Sector *	66 Neutral	$17.65B	18.10	5.60%	3.62%	6.62%	11.55%
CWT	66 Neutral	$2.69B	19.76	8.19%	2.74%	-2.60%	-33.78%
ARIS	64 Neutral	―	―	7.11%	2.22%	16.42%	12.98%
WTTR	62 Neutral	$1.42B	36.26	2.48%	2.71%	-4.60%	-67.28%
MSEX	55 Neutral	$939.81M	21.51	9.27%	2.69%	6.24%	3.35%

H2O America Corporate Events

Regulatory Delays Threaten H2O America’s Strategic Sale and Revenue Goals

The regulatory approval process required by the PUCT poses a significant risk to H2O America, as any extension beyond current estimates could undermine the anticipated benefits of the proposed transactions. The sale of the Regulated Business hinges on PUCT’s approval, expected by mid-2026, but the timeline remains uncertain and could be delayed. This uncertainty, coupled with other uncontrollable conditions, may adversely affect the transaction’s completion, potentially leading to increased costs or reduced revenues for H2O America. Such delays could prevent the company from realizing the expected advantages within the desired timeframe.

H2O America Reports Strong Q3 Earnings and Strategic Growth

H2O America’s recent earnings call painted a picture of robust financial health and strategic foresight, underscored by notable earnings per share (EPS) growth and successful mergers and acquisitions (M&A). While the company celebrated these achievements, it also acknowledged challenges such as rising operating costs and uncertainties in regulatory approvals and acquisitions.

H2O America Reports Strong Q3 2025 Results

H2O America is a prominent investor-owned water and wastewater utility company in the United States, delivering essential water services to over 1.6 million people through its subsidiaries in California, Connecticut, Maine, and Texas.

H2O America Amends Credit Agreement with Banks

On September 12, 2025, H2O America and its subsidiaries entered into an amended and restated credit agreement with JPMorgan Chase Bank and Wells Fargo Bank. The agreement increases the commitment from $300 million to $350 million, extends the maturity date to September 12, 2030, and revises borrower sublimits, impacting the company’s financial flexibility and operational capacity.

The most recent analyst rating on (HTO) stock is a Hold with a $54.00 price target. To see the full list of analyst forecasts on H2O America stock, see the HTO Stock Forecast page.

H2O America Reports Strong Q2 2025 Earnings Growth

H2O America is a leading investor-owned water and wastewater utility in the United States, providing essential water services to 1.6 million people across several states, including California, Connecticut, Maine, and Texas. The company is known for its strong financial performance, operational expertise, and commitment to community engagement and environmental sustainability.