Pure Cycle (PCYO) AI Stock Analysis

• Market Cap: $247.41M
• Dividend Yield: N/A
• Average Volume (3M): 46.66K
• Price to Earnings (P/E): 14.7
• Beta (1Y): 0.69
• Revenue Growth: -9.25%
• EPS Growth: 12.89%
• Country: US
• Employees: 39
• Sector: Utilities
• Sector Strength: 65
• Industry: Regulated Water
• EPS (TTM): 0.19
• Shares Outstanding: 24,090,605
• 10 Day Avg. Volume: 55,734
• 30 Day Avg. Volume: 46,656
• PEG Ratio: 1.48
• Price to Book (P/B): 1.70
• Price to Sales (P/S): 9.32
• P/FCF Ratio: 65.88
• Enterprise Value/Market Cap: 0.97
• Enterprise Value/Revenue: 8.18
• Enterprise Value/Gross Profit: 13.87
• Enterprise Value/Ebitda: 11.45
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 74 Outperform
• Price Target: $11.50 ▲(0.88% Upside)
• Action: Reiterated Date: 01/16/26
• Date: Action: Reiterated 01/16/26

PCYO scores well primarily on financial strength (very conservative balance sheet and strong reported profitability), supported by generally constructive technicals and a positive earnings call with reiterated FY2026 guidance. The main constraints on the score are cash-flow predictability/earnings conversion, valuation that is not obviously cheap (P/E ~20.6), and business timing volatility (notably oil & gas water and dependence on longer-dated interchange-driven upside).

Positive Factors

Balance Sheet Strength

Extremely low leverage and a large equity base give durable financial flexibility to fund utility capex, land development and buybacks without pressing for high-cost financing. TTM ROE (~11.9%) shows returns while low debt materially reduces solvency and refinancing risk.

Recurring Water Customer Growth

A 22% CAGR in metered water customers strengthens the recurring revenue mix and underpins predictable billing streams. Over months this growth supports rate-setting leverage, fixed-cost absorption, and long-term revenue visibility versus one-off development cycles.

Substantial Unused Water Capacity

Very low utilization of existing capacity creates scalable, low incremental-cost supply to capture future residential, commercial or industrial demand. This structural spare capacity lowers marginal capex needs and supports higher-margin tap and industrial sales over the medium term.

Negative Factors

Cash-Flow Durability

Moderate cash conversion and historical volatility limit confidence in internally funding development and capex. Periods of negative OCF/FCF increase reliance on external financing or equity, which can delay projects, constrain buybacks and amplify execution risk over the coming quarters.

Industrial Water Revenue Volatility

Dependence on oil & gas deliveries creates episodic high-margin revenue but materially raises quarter-to-quarter variability. Such lumpy demand undermines predictability of cash flow and margins, complicating operating plans, guidance reliability and long-term revenue smoothing.

Interchange Permitting Timing Risk

A meaningful portion of future commercial value and ~ $50M public-improvement receivable depend on multi-stage permitting and a 2027 construction timeline. Any delays or municipal setbacks would postpone monetization, stretching payback horizons and raising execution and regulatory risk.

Pure Cycle Business Overview & Revenue Model

Company Description

Pure 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 Money

Pure Cycle primarily makes money through (1) water and wastewater operations and (2) real estate-related development revenues tied to its infrastructure. In its water and wastewater segment, the company generates recurring revenue by providing water delivery and wastewater service to customers within its service areas, typically through monthly service charges and volumetric usage fees set under applicable rate structures and service agreements; it may also earn one-time or non-recurring fees associated with new connections, tap/installation, or system access when new developments are added to the network (specific fee types and amounts: null). In its land development/real estate activities, Pure Cycle can generate revenue from selling developed lots or parcels and/or from development-related arrangements that monetize its land and the availability of water/wastewater capacity needed to enable construction (specific project names, counterparties, and deal terms: null). Key factors influencing earnings include customer growth and water demand in its serviced communities, timing of real estate development and lot/land sales, capital spending and financing costs for building/expanding utility infrastructure, and regulatory/rate-setting outcomes that affect the prices it can charge for utility services (specific regulatory frameworks and rate details: null). Significant partnerships or major named counterparties: null.

Pure Cycle Financial Statement Overview

Summary

Strong overall financial quality driven by exceptionally low leverage and a solid equity base (Balance Sheet score 92) plus strong reported profitability (Income Statement score 78). The key offset is weaker cash-flow quality and consistency (Cash Flow score 56), with only moderate cash conversion versus earnings and historical volatility.

Income Statement

TTM (Trailing-Twelve-Months) revenue grew ~13% with very strong profitability (gross margin ~59% and net margin ~57%), and EBIT margin remains healthy. However, growth has been choppy across recent annual periods (including revenue declines in 2023 and 2025 annual data), and some historical margins look unusually elevated, suggesting earnings can be influenced by non-recurring items and may be less predictable than a typical steady regulated profile.

Balance Sheet

Balance sheet is a clear strength: leverage is extremely low (TTM debt-to-equity ~0.003) with a large equity base and expanding asset/equity levels over time. Returns on equity are solid in TTM (~11.9%) and have generally improved versus earlier years, though they have varied meaningfully year to year, indicating profitability can swing even with low balance-sheet risk.

Cash Flow

Cash generation is the main mixed area. In TTM (Trailing-Twelve-Months), operating cash flow is positive (~$6.5M) and free cash flow is positive (~$3.0M), but free cash flow declined (~-19%) and cash conversion is only moderate (operating cash flow is ~0.57x net income and free cash flow is ~46% of net income). Prior years show material volatility, including periods of negative operating cash flow and negative free cash flow, which raises confidence risk around the durability of cash generation.

Breakdown	TTM	Aug 2025	Aug 2024	Aug 2023	Aug 2022	Aug 2021
Income Statement
Total Revenue	29.47M	26.09M	28.75M	14.59M	23.00M	17.13M
Gross Profit	17.37M	16.03M	19.76M	8.04M	16.37M	10.72M
EBITDA	21.04M	20.19M	18.17M	8.58M	14.92M	28.36M
Net Income	13.74M	13.11M	11.61M	4.70M	9.62M	20.11M
Balance Sheet
Total Assets	168.07M	162.28M	147.35M	133.22M	129.23M	117.18M
Cash, Cash Equivalents and Short-Term Investments	17.14M	21.93M	22.11M	26.01M	34.89M	20.12M
Total Debt	8.00M	6.79M	7.04M	7.28M	4.10M	121.00K
Total Liabilities	20.58M	19.54M	17.65M	14.98M	16.23M	14.44M
Stockholders Equity	147.49M	142.74M	129.70M	118.23M	113.00M	102.74M
Cash Flow
Free Cash Flow	3.00M	3.69M	-461.00K	-10.15M	11.78M	560.00K
Operating Cash Flow	6.51M	13.16M	2.21M	-2.34M	17.45M	3.46M
Investing Cash Flow	-7.83M	-9.65M	-4.73M	-9.24M	-6.67M	-2.90M
Financing Cash Flow	825.00K	-491.00K	-612.00K	2.85M	3.99M	87.00K

Pure Cycle Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 11.40
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

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 11.4 is above the 20-day moving average (MA) of 10.57, above the 50-day MA of 11.01, and above the 200-day MA of 10.82, indicating a bearish trend. The MACD of -0.27 indicates Positive momentum. The RSI at 42.42 is Neutral, neither overbought nor oversold. The STOCH value of 23.08 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for PCYO.

Pure Cycle Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PCYO	74 Outperform	$247.41M	14.74	9.79%	―	-9.25%	12.89%
ARTNA	70 Outperform	$339.68M	14.28	9.26%	3.87%	5.80%	12.33%
CWCO	68 Neutral	$553.30M	25.38	7.85%	1.40%	-17.62%	-54.25%
Sector *	66 Neutral	$17.65B	18.10	5.60%	3.62%	6.62%	11.55%
YORW	58 Neutral	$454.70M	22.20	8.49%	2.68%	3.63%	-5.82%
CDZI	55 Neutral	$426.35M	-13.71	-136.36%	―	188.33%	4.12%
GWRS	54 Neutral	$211.65M	77.24	3.58%	3.56%	7.06%	-38.94%

Pure Cycle Corporate Events

Pure Cycle Adds Maran Representative to Board, Forms Committee

On January 14, 2026, Pure Cycle entered into a cooperation agreement with major shareholder Maran Capital Management, which holds about 14.7% of its common stock, to expand its board from seven to eight directors and appoint Maran President Daniel J. Roller as an independent director following the 2026 annual meeting. Roller, deemed independent under Nasdaq rules, was appointed that day, named chair of a newly formed Strategy and Capital Allocation Committee and added to the Nominating and Corporate Governance Committee, with Maran agreeing to customary standstill and voting commitments through a defined period and gaining the right to recommend a replacement director under certain circumstances. At the January 14, 2026 annual meeting, shareholders elected all incumbent director nominees, ratified the appointment of Forvis Mazars as auditor for fiscal 2026, approved executive compensation on an advisory basis, and backed holding say-on-pay votes annually, reinforcing the existing governance framework as the company brings in an influential shareholder representative to help shape strategy and capital allocation around its water, land development and rental assets.

The most recent analyst rating on (PCYO) stock is a Buy with a $12.50 price target. To see the full list of analyst forecasts on Pure Cycle stock, see the PCYO Stock Forecast page.

Pure Cycle Posts Strong Quarterly Growth Driven by Sky Ranch

On January 7, 2026, Pure Cycle reported results for the quarter ended November 30, 2025, posting net income of about $4.6 million, up 16% from a year earlier, on revenue of $9.1 million, a 59% increase, marking its 26th consecutive profitable quarter and earnings of $0.19 per diluted share. Growth was driven largely by land development revenue at Sky Ranch, where the company completed remaining lots in Phase 2C, advanced Phase 2D with new homebuilder partners, and began platting 159 lots in Phase 2E, even as EBITDA declined 12% and water deliveries to oil and gas customers fell due to reduced drilling activity; Pure Cycle also expanded its single-family rental portfolio to 19 homes, continued share repurchases supported by $17.1 million in cash and $14.8 million in working capital, and highlighted coming community enhancements, including a charter high school and a new I-70 interchange, underscoring its strategy to balance growth in recurring utility and rental revenues with ongoing residential and commercial build-out at Sky Ranch.

The most recent analyst rating on (PCYO) stock is a Buy with a $13.00 price target. To see the full list of analyst forecasts on Pure Cycle stock, see the PCYO Stock Forecast page.