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Pure Cycle Corp. (PCYO)
NASDAQ:PCYO
US Market

Pure Cycle (PCYO) AI Stock Analysis

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Pure Cycle

(NASDAQ:PCYO)

Rating:79Outperform
Price Target:
$12.00
▲(8.21%Upside)
Pure Cycle's strong financial performance and positive earnings call sentiment are the most significant factors contributing to its overall stock score. While technical analysis suggests some caution due to resistance levels, the company's strategic initiatives and solid valuation further support its stable outlook.

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

Pure Cycle Business Overview & Revenue Model

Company DescriptionPure Cycle Corporation (PCYO) is a diversified water and land resource company based in the United States. Operating primarily in the sectors of water and land development, Pure Cycle offers sustainable water and wastewater services alongside real estate development. The company focuses on providing innovative solutions to address water scarcity and urban growth challenges, leveraging its portfolio of water rights and land assets to create synergistic opportunities within its operational regions.
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:Apr 09, 2025
(Q2-2025)
|
% Change Since: 2.88%|
Next Earnings Date:Jul 09, 2025
Earnings Call Sentiment Positive
The earnings call showed a strong performance in revenue, net income, and liquidity, driven by mineral royalties and aggressive development in the Water Utilities and Land Development segments. While there were some seasonal and segment-specific challenges, the company's strategic positioning and future outlook remain positive.
Q2-2025 Updates
Positive Updates
Strong Quarterly Revenue and Growth
Q2 revenue was $4 million with a 38% gross margin, largely driven by mineral royalties. Year-to-date revenue is approximately $9.7 million with a gross margin over 50%.
Solid Net Income and Earnings Per Share
Continued growth in earnings per share and solid net income, with contributions from royalty income and three construction phases underway.
Water Utilities Segment Performance
Driven by the receipt of tap fees and aggressive home building, with additional oil and gas activity expected to increase in fiscal 2026.
Land Development and Single-Family Rentals
Accelerated development with four phases under construction, high occupancy rates in rentals, and plans to increase single-family rental homes.
Strong Liquidity Position
Over $20 million in liquidity, with cash and investments at $17 million and a strong balance sheet to support ongoing developments.
Negative Updates
Seasonal Challenges
Q2 is typically the softest quarter due to seasonal construction challenges in Colorado's winter months.
Oil and Gas Segment Weakness
Oil and gas deliveries were weaker than expected due to timing of well permit production, although future activity is anticipated.
Company Guidance
During the Second Quarter Fiscal Year 2025 Earnings Call, Pure Cycle provided guidance indicating a strong financial performance with $4 million in revenue and a 38% gross margin largely driven by royalty income. The company highlighted its year-to-date revenue of approximately $10 million, aiming to meet its fiscal 2025 guidance of around $30 to $31 million. Gross profit margins were reported to be around 50%-plus, with continued growth in earnings per share, which stood at $0.20, achieving nearly 50% of the company's annual guidance. The call also underscored the company's strategic focus on land development, water utilities, and single-family rentals, with an expected increase in the number of single-family rental units to over 200 homes as part of the Sky Ranch development. Additionally, Pure Cycle discussed its liquidity position, boasting over $20 million, and its strategic priorities, including land acquisition and managing its water utility assets, with a capacity to service about 60,000 connections.

Pure Cycle Financial Statement Overview

Summary
Pure Cycle demonstrates strong financial performance with consistent revenue growth, robust profit margins, and a solid balance sheet with low leverage. Although the return on equity is moderate, the company’s financial health is commendable, supporting its stable position in the regulated water industry.
Income Statement
85
Very Positive
Pure Cycle demonstrates strong financial performance with consistent revenue growth, notably a 3.9% increase in TTM revenue compared to the previous year, and a substantial gross profit margin of 65.8% in the TTM period. The company also maintains healthy profitability with a net profit margin of 51.1% and an EBIT margin of 37.6%. These metrics indicate robust operational efficiency and profitability.
Balance Sheet
78
Positive
The balance sheet reflects a solid financial position with a low debt-to-equity ratio of 0.0023, suggesting minimal reliance on debt financing. The equity ratio stands at 89.8%, indicating strong equity financing. However, the return on equity is moderate at 11.4%, suggesting room for improvement in generating returns from shareholders' equity.
Cash Flow
82
Very Positive
Cash flow analysis reveals positive developments with a significant turnaround in free cash flow, growing from a negative position to $6.49 million in the TTM period. The operating cash flow to net income ratio is favorable at 0.53, showing efficient cash conversion. Additionally, free cash flow to net income ratio of 0.43 indicates strong cash generation relative to net income.
BreakdownTTMSep 2024Sep 2023Sep 2022Sep 2021Sep 2020
Income Statement
Total Revenue29.91M28.75M14.59M23.00M17.13M25.86M
Gross Profit19.68M19.76M8.04M16.37M10.72M7.54M
EBITDA21.62M18.17M8.58M14.92M28.36M10.64M
Net Income14.18M11.61M4.70M9.62M20.11M6.75M
Balance Sheet
Total Assets149.66M147.35M133.22M129.23M117.18M89.76M
Cash, Cash Equivalents and Short-Term Investments16.80M22.11M26.01M34.89M20.12M21.80M
Total Debt7.01M7.04M7.28M4.10M121.00K120.28K
Total Liabilities15.24M17.65M14.98M16.23M14.44M7.72M
Stockholders Equity134.41M129.70M118.23M113.00M102.74M82.04M
Cash Flow
Free Cash Flow6.55M-461.00K-10.15M11.63M560.00K12.09M
Operating Cash Flow8.12M2.21M-2.34M17.45M3.46M20.72M
Investing Cash Flow-8.66M-4.73M-9.24M-6.67M-2.90M-3.45M
Financing Cash Flow-617.00K-612.00K2.85M3.99M87.00K44.78K

Pure Cycle Technical Analysis

Technical Analysis Sentiment
Positive
Last Price11.09
Price Trends
50DMA
10.41
Positive
100DMA
10.67
Positive
200DMA
11.28
Negative
Market Momentum
MACD
0.06
Negative
RSI
63.36
Neutral
STOCH
90.24
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PCYO, the sentiment is Positive. The current price of 11.09 is above the 20-day moving average (MA) of 10.40, above the 50-day MA of 10.41, and below the 200-day MA of 11.28, indicating a neutral trend. The MACD of 0.06 indicates Negative momentum. The RSI at 63.36 is Neutral, neither overbought nor oversold. The STOCH value of 90.24 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 (67)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
79
Outperform
$264.60M18.6911.12%58.77%116.91%
72
Outperform
$492.46M18.647.83%1.81%-31.57%-18.12%
69
Neutral
$348.82M16.269.04%3.64%8.31%21.97%
67
Neutral
$16.39B16.974.47%3.56%4.77%6.10%
63
Neutral
$283.57M44.159.11%2.94%3.94%-8.78%
58
Neutral
$462.54M23.498.63%2.73%3.45%-19.90%
53
Neutral
$250.54M-84.03%283.67%-11.36%
* Utilities Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
PCYO
Pure Cycle
11.09
1.86
20.15%
ARTNA
Artesian Resources
33.77
-2.32
-6.43%
CDZI
Cadiz
3.06
-0.07
-2.24%
CWCO
Consolidated Water Co
31.29
6.35
25.46%
YORW
The York Water Company
32.34
-3.56
-9.92%
GWRS
Global Water Resources
10.16
-1.40
-12.11%

Pure Cycle Corporate Events

Stock BuybackBusiness Operations and StrategyFinancial Disclosures
Pure Cycle Reports Positive Q2 2025 Financial Results
Positive
Apr 10, 2025

On April 9, 2025, Pure Cycle Corporation announced its financial results for the three and six months ended February 28, 2025, marking its twenty-third consecutive quarter of positive net income. The company continues to progress in the development of the Sky Ranch community, with significant advancements in various phases of construction and an increase in royalty revenues from its oil and gas interests. Despite seasonal slowdowns, Pure Cycle reported revenues of $4.0 million and $9.7 million for the quarter and year-to-date, respectively, and maintained a strong balance sheet with $16.8 million in cash and equivalents. The company’s strategic focus remains on growth and shareholder returns, with ongoing investments in development projects and a share repurchase program.

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 27, 2025