Companhia De Saneamento (SBS) AI Stock Analysis

• Market Cap: $15.80B
• Dividend Yield: 2.36%
• Average Volume (3M): 1.16M
• Price to Earnings (P/E): 8.0
• Beta (1Y): 0.42
• Revenue Growth: 30.74%
• EPS Growth: 143.94%
• Country: US
• Employees: 10,552
• Sector: Utilities
• Sector Strength: 60
• Industry: Regulated Water
• EPS (TTM): 0.53
• Shares Outstanding: 683,509,900
• 10 Day Avg. Volume: 1,151,437
• 30 Day Avg. Volume: 1,164,798
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 1.22
• Enterprise Value/Revenue: 0.43
• Enterprise Value/Gross Profit: 0.71
• Enterprise Value/Ebitda: 0.94
• 1Y Price Target: $25.90
• Price Target Upside: 9.79% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 1

• Rating: 76 Outperform
• Price Target: $26.00 ▲(10.22% Upside)

The overall stock score of 75.8 reflects strong financial performance and attractive valuation. The company's robust revenue and profit growth, along with a well-structured balance sheet, underpin its financial health. The stock's undervaluation and dividend yield further enhance its appeal. However, technical indicators suggest caution due to overbought conditions, which could lead to a short-term pullback.

Positive Factors

Revenue Growth

SBS's impressive revenue growth of 41.34% reflects strong market demand and effective service delivery, supporting long-term business expansion.

Profitability

High profit margins demonstrate SBS's operational efficiency and pricing power, contributing to sustainable earnings and competitive advantage.

Cash Flow Generation

Robust free cash flow growth ensures SBS can fund operations and invest in infrastructure, supporting long-term strategic initiatives.

Negative Factors

Asset Utilization

Suboptimal asset utilization may limit SBS's ability to maximize returns on investment, potentially impacting future growth efficiency.

Cash Flow Conversion

While cash flows are strong, improving conversion ratios would enhance liquidity and financial flexibility, crucial for sustained growth.

Leverage

Moderate leverage, while manageable, requires careful monitoring to prevent potential financial strain and ensure long-term stability.

Companhia De Saneamento Business Overview & Revenue Model

Company Description

Companhia de Saneamento Básico do Estado de São Paulo – SABESP provides water and sewage services to residential, commercial, industrial, and governmental customers. It provides water supply, sanitary sewage, urban rainwater management and drainage, urban cleaning, and solid waste management services, as well as related activities, including the planning, operation, maintenance, and commercialization of energy. As of December 31, 2021, the company provided water services through 9.8 million water connections to approximately 27.8 million people; sewage services through 8.4 million sewage connections to approximately 24.6 million people; and operated 88,904 kilometers of water pipes and water transmission lines, as well as 61,122 kilometers of sewer lines. It also offers water and/or sewage services to four other municipalities through special purpose companies. The company was founded in 1954 and is headquartered in São Paulo, Brazil.

How the Company Makes Money

SBS generates revenue primarily through the provision of water and wastewater services to residential, commercial, and industrial customers. The company charges fees for water consumption based on metered usage and has a structured tariff system that adjusts rates according to service levels and regulatory guidelines. Additionally, SBS may receive government subsidies or grants aimed at infrastructure projects and improvements. Significant partnerships with local governments and regulatory bodies help stabilize its revenue streams by ensuring compliance with service mandates and securing funding for capital projects.

Companhia De Saneamento Financial Statement Overview

Summary

Companhia De Saneamento exhibits strong financial health across all three financial statements. The company's revenue and profit growth are impressive, reflecting effective management and operational efficiency. The balance sheet is well-structured with moderate leverage and strong equity backing. Cash flows are robust, supporting ongoing operations and potential growth initiatives. However, there is potential for further optimization in cash flow generation and asset utilization.

Income Statement

The income statement shows robust growth with a significant increase in total revenue from the previous year. The Gross Profit Margin stands at 54.07%, and the Net Profit Margin is 26.50%, both indicating strong profitability. Notably, the revenue growth rate is an impressive 41.34% from 2023 to 2024. The EBIT Margin is 42.92%, and the EBITDA Margin is 50.12%, reflecting excellent operational efficiency. Overall, the company demonstrates strong financial performance.

Balance Sheet

The balance sheet reveals a healthy financial position with a Debt-to-Equity Ratio of 0.68, indicating moderate leverage. The Return on Equity (ROE) is 25.94%, showcasing efficient use of equity. The Equity Ratio is 45.60%, pointing to a solid equity cushion. While the company is well-capitalized, there is room for improvement in asset utilization.

Cash Flow

The cash flow statement highlights a strong Free Cash Flow growth rate of 55.09% from 2023 to 2024. The Operating Cash Flow to Net Income Ratio is 0.77, suggesting efficient cash generation from operations. The Free Cash Flow to Net Income Ratio is 0.76, indicating that a substantial portion of net income is converted into free cash flow. Although cash flows are robust, further improvement in conversion ratios could enhance overall cash flow strength.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	44.57B	36.15B	25.57B	22.06B	19.49B	17.80B
Gross Profit	27.04B	19.54B	9.52B	7.70B	6.69B	6.62B
EBITDA	20.53B	18.11B	8.96B	8.06B	6.28B	4.16B
Net Income	11.06B	9.58B	3.52B	3.12B	2.31B	973.32M
Balance Sheet
Total Assets	85.69B	80.97B	61.47B	57.21B	53.17B	50.42B
Cash, Cash Equivalents and Short-Term Investments	8.14B	5.38B	3.27B	3.55B	3.15B	3.81B
Total Debt	27.64B	25.26B	19.54B	18.96B	17.72B	17.26B
Total Liabilities	47.29B	44.04B	31.61B	29.87B	28.23B	27.62B
Stockholders Equity	38.40B	36.93B	29.86B	27.33B	24.93B	22.79B
Cash Flow
Free Cash Flow	6.96B	7.30B	4.71B	3.89B	3.86B	4.94B
Operating Cash Flow	7.11B	7.40B	4.85B	3.97B	3.91B	4.98B
Investing Cash Flow	-9.16B	-9.98B	-4.91B	-2.88B	-2.66B	-6.77B
Financing Cash Flow	3.68B	3.42B	-977.84M	60.30M	-929.02M	-66.35M

Companhia De Saneamento Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 23.59
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SBS, the sentiment is Positive. The current price of 23.59 is above the 20-day moving average (MA) of 22.28, above the 50-day MA of 21.06, and above the 200-day MA of 18.55, indicating a bullish trend. The MACD of 0.66 indicates Negative momentum. The RSI at 64.66 is Neutral, neither overbought nor oversold. The STOCH value of 90.19 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for SBS.

Companhia De Saneamento Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
SBS	76 Outperform	$15.80B	7.98	30.12%	2.36%	30.74%	143.94%
MSEX	75 Outperform	$970.92M	21.98	9.70%	2.52%	11.91%	16.88%
WTRG	69 Neutral	$10.73B	16.24	10.02%	3.45%	20.70%	14.59%
CWT	69 Neutral	$2.76B	19.95	8.49%	2.63%	0.62%	-24.24%
AWR	66 Neutral	$2.83B	22.42	13.77%	2.60%	8.55%	13.57%
AWK	66 Neutral	$28.22B	24.94	10.40%	2.28%	13.37%	13.29%
Sector *	66 Neutral	$17.50B	17.93	5.60%	3.63%	6.62%	11.55%