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Pure Cycle Corp. (PCYO)
NASDAQ:PCYO
US Market
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Pure Cycle (PCYO) AI Stock Analysis

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PCYO

Pure Cycle

(NASDAQ:PCYO)

Rating:68Neutral
Price Target:
$11.00
▲(8.70%Upside)
Pure Cycle's overall score reflects a strong financial foundation, highlighted by robust profitability and low leverage. However, bearish technical indicators and moderate valuation temper the outlook. Positive sentiment from the earnings call and strategic corporate initiatives contribute to growth potential, but operational challenges, such as permitting delays, pose risks.

Pure Cycle (PCYO) vs. SPDR S&P 500 ETF (SPY)

Pure Cycle Business Overview & Revenue Model

Company DescriptionPure Cycle Corporation designs, constructs, operates, and maintains water and wastewater systems in the Denver metropolitan area and Colorado Front Range in the United States. It operates in two segments, Wholesale Water and Wastewater Services, and Land Development. The company engages in the wholesale water production, storage, treatment, and distribution systems; wastewater collection and treatment systems; development of master-planned community; and oil and gas leasing business. It serves domestic, commercial, and industrial customers in the Denver metropolitan region. Pure Cycle Corporation was founded in 1976 and is based in Watkins, Colorado.
How the Company Makes MoneyPure Cycle Corporation generates revenue through multiple streams, primarily focusing on water and wastewater services and real estate development. The company earns money by providing water and wastewater services to municipal, commercial, and industrial customers. This includes water delivery, wastewater treatment, and infrastructure management. Revenue is also derived from its real estate development activities, where the company develops and sells residential and commercial land plots, leveraging its extensive land holdings. Additionally, Pure Cycle may form strategic partnerships or joint ventures to enhance its service offerings and expand its market reach, contributing to its overall earnings. The integration of water resource management with real estate development allows Pure Cycle to capitalize on the growing demand for sustainable infrastructure solutions in water-scarce regions.

Pure Cycle Earnings Call Summary

Earnings Call Date:Jul 09, 2025
(Q3-2025)
|
% Change Since: -4.89%|
Next Earnings Date:Nov 18, 2025
Earnings Call Sentiment Neutral
The call highlighted significant achievements such as strong gross profit margins, growth in mineral estate revenues, and expansion in single-family rentals. However, it also acknowledged challenges like slight revenue declines, permitting delays affecting growth, and weak industrial water sales. Despite these challenges, the company's liquidity and strategic initiatives remain strong.
Q3-2025 Updates
Positive Updates
Strong Gross Profit Margins
Quarterly revenues reached $5 million, with gross profits maintaining a 63% margin, equating to $3.2 million in gross profits.
Mineral Estate Revenue Growth
Mineral estate revenues contributed over $1 million this quarter, with year-to-date revenues reaching close to $6 million, driven by new wells.
Net Income Performance
Quarterly net income was over $2 million, translating to $0.09 earnings per share; year-to-date net income reached $7 million, or $0.29 per share.
Expansion in Single-Family Rentals
Strong growth anticipated in single-family rentals, with 98 homes planned in Phase 2D over the next 18 months.
Liquidity and Capital Management
The company maintains a high degree of liquidity, enabling continued investment in business segments and potential land acquisitions.
Groundbreaking of High School
Construction has begun on a high school, enhancing the attractiveness of the Sky Ranch community for new families.
Negative Updates
Slight Revenue Decline
Revenues were slightly down from previous quarters due to weighted deliveries in filing 6, affecting year-to-date performance.
Permitting Delays Affecting Growth
New electrical standards in Arapahoe County delayed single-family rental growth and impacted home sales in Phase 2B.
Weak Industrial Water Sales
Industrial water sales were light this year due to permit-related delays, impacting overall water utility segment performance.
Delayed Water Rights Development
Challenges in permitting new water rights from Box Elder Creek led to unresolved negotiations, delaying water resource development.
Company Guidance
During the third quarter earnings call, Pure Cycle Corporation provided guidance that reflected a solid financial performance and strategic outlook for fiscal year 2025. The company reported quarterly revenues of $5 million, with a strong gross profit margin of 63%, translating to $3.2 million in gross profits. Net income for the quarter was over $2 million, equating to $0.09 per share, with year-to-date net income totaled at approximately $7 million or $0.29 earnings per share. The company highlighted its diversification through its mineral estate, which contributed over $1 million in quarterly results and close to $6 million year-to-date. Pure Cycle is on track to meet its fiscal year guidance of $31 million in revenues and $23.7 million in gross profit, with significant contributions expected from the delivery of 220 lots by year-end. The water utility segment continues to grow with recurring revenue streams, although the industrial segment was lighter than previous years due to a focus on permitting. The land development segment is delivering lots in real-time to match homebuilder demand, while the single-family rental segment anticipates increased activity in the coming quarters. The company maintains a strong liquidity position, facilitating opportunities for capital deployment and growth amid market headwinds in consumer confidence and affordability.

Pure Cycle Financial Statement Overview

Summary
Pure Cycle exhibits strong financial health with impressive profitability and efficient operations. While there is a slight concern over recent revenue contraction, the company maintains a robust balance sheet with minimal leverage and strong equity support. Cash flow generation is improving, yet there is potential for enhanced cash conversion efficiencies.
Income Statement
78
Positive
Pure Cycle has demonstrated commendable financial performance with a strong gross profit margin of 66.41% and a robust net profit margin of 54.94% for TTM, signaling efficiency in converting sales into actual profit. However, the revenue growth trajectory shows a decline of 4.52% in the past year, indicating potential challenges in top-line expansion. Despite this, the company maintains healthy EBIT and EBITDA margins of 34.66% and 75.53% respectively, reflecting solid operational efficiency.
Balance Sheet
82
Very Positive
The company's balance sheet is strong, with a low debt-to-equity ratio of 0.0026, underscoring minimal leverage risk. The equity ratio of 90.07% signifies a solid asset base funded largely by equity, enhancing financial stability. Return on equity stands impressively at 11.03%, indicating effective utilization of shareholder funds to generate profits.
Cash Flow
75
Positive
The cash flow statement reveals positive developments, with a significant improvement in free cash flow to $5.48M, demonstrating 1290% growth from a negative base last year. The operating cash flow to net income ratio of 0.45 and free cash flow to net income ratio of 0.36 indicate effective cash generation relative to net income, though there is room for better alignment.
BreakdownSep 2024Sep 2023Sep 2022Sep 2021Sep 2020
Income Statement
Total Revenue28.75M14.59M23.00M17.13M25.86M
Gross Profit19.76M8.04M16.37M10.72M7.54M
EBITDA18.17M8.58M14.92M28.36M10.64M
Net Income11.61M4.70M9.62M20.11M6.75M
Balance Sheet
Total Assets147.35M133.22M129.23M117.18M89.76M
Cash, Cash Equivalents and Short-Term Investments22.11M26.01M34.89M20.12M21.80M
Total Debt7.04M7.28M4.10M121.00K120.28K
Total Liabilities17.65M14.98M16.23M14.44M7.72M
Stockholders Equity129.70M118.23M113.00M102.74M82.04M
Cash Flow
Free Cash Flow-461.00K-10.15M11.63M560.00K12.09M
Operating Cash Flow2.21M-2.34M17.45M3.46M20.72M
Investing Cash Flow-4.73M-9.24M-6.67M-2.90M-3.45M
Financing Cash Flow-612.00K2.85M3.99M87.00K44.78K

Pure Cycle Technical Analysis

Technical Analysis Sentiment
Negative
Last Price10.12
Price Trends
50DMA
10.45
Negative
100DMA
10.47
Negative
200DMA
11.25
Negative
Market Momentum
MACD
-0.13
Positive
RSI
44.99
Neutral
STOCH
17.00
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PCYO, the sentiment is Negative. The current price of 10.12 is below the 20-day moving average (MA) of 10.40, below the 50-day MA of 10.45, and below the 200-day MA of 11.25, indicating a bearish trend. The MACD of -0.13 indicates Positive momentum. The RSI at 44.99 is Neutral, neither overbought nor oversold. The STOCH value of 17.00 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for PCYO.

Pure Cycle Risk Analysis

Pure Cycle disclosed 48 risk factors in its most recent earnings report. Pure Cycle reported the most risks in the "Production" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Pure Cycle Peers Comparison

Overall Rating
UnderperformOutperform
Sector (57)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
71
Outperform
$343.97M16.159.04%3.65%8.31%21.97%
69
Neutral
$473.04M17.957.83%1.58%-31.57%-18.12%
68
Neutral
$238.58M17.5610.47%40.29%124.50%
61
Neutral
$281.92M44.629.11%2.95%3.94%-8.78%
58
Neutral
$446.55M22.898.63%2.80%3.45%-19.90%
57
Neutral
AU$887.24M4.31-2.37%5.07%21.41%-109.15%
53
Neutral
$243.99M-84.03%283.67%-11.36%
* Utilities Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
PCYO
Pure Cycle
9.91
-1.01
-9.25%
ARTNA
Artesian Resources
33.07
-4.85
-12.79%
CDZI
Cadiz
2.98
-0.39
-11.57%
CWCO
Consolidated Water Co
29.66
0.69
2.38%
YORW
The York Water Company
30.57
-9.51
-23.73%
GWRS
Global Water Resources
10.17
-2.78
-21.47%

Pure Cycle Corporate Events

Business Operations and StrategyFinancial Disclosures
Pure Cycle Reports Strong Quarterly Financial Results
Positive
Jul 10, 2025

On July 9, 2025, Pure Cycle Corporation announced financial results for the three and nine months ended May 31, 2025, reporting a net income of $2.3 million for the quarter, marking its 24th consecutive profitable quarter. The company continues to develop its Sky Ranch community, with significant progress in various phases, and anticipates delivering finished lots by the end of fiscal 2025. Despite market volatility, Pure Cycle’s focus on entry-level lots and strategic partnerships with national homebuilders have positioned it well in the Denver market. The company also reported increased royalty revenues from its oil and gas interests and emphasized its strong balance sheet and capital management strategy aimed at growth and shareholder returns.

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: Jul 12, 2025