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Companhia De Saneamento Basico Do Estado De Sao (SBS)
NYSE:SBS
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Companhia De Saneamento
(NYSE:SBS)
Rating:76Outperform
Price Target:
$26.00
â–²(21.89% Upside)
Positive Factors
Cost Management
Faster-than-expected cost-cutting initiatives are contributing to positive financial performance.
Debt Management
Net debt decreased by R$312mn, indicating improved financial health.
Earnings
Sabesp reported strong results with R$3bn adj. EBITDA, surpassing expectations by 6%.
Market Position
Sabesp is a top pick in Brazilian Utilities, emphasizing its strong market position and growth potential.
Negative Factors
Regulatory Environment
Change in regulation could add R$4-6bn NPV, impacting financials by addressing capex recognition delays.
Risk Management
The end of the revenue gap is not seen as a risk, as new regulations and initiatives could mitigate material changes.
Companhia De Saneamento (SBS) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$14.39B
Dividend Yield2.61%
Average Volume (3M)1.23M
Price to Earnings (P/E)7.2
Beta (1Y)0.38
Revenue Growth30.74%
EPS Growth143.94%
CountryUS
Employees10,552
SectorUtilities
Sector Strength81
IndustryRegulated Water
Share Statistics
EPS (TTM)0.53
Shares Outstanding683,509,900
10 Day Avg. Volume1,341,404
30 Day Avg. Volume1,229,291
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)N/A
P/FCF RatioN/A
Enterprise Value/Market Cap1.34
Enterprise Value/Revenue0.43
Enterprise Value/Gross Profit0.71
Enterprise Value/Ebitda0.94
Forecast
1Y Price Target
$25.95Price Target Upside21.66% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering2
Companhia De Saneamento Business Overview & Revenue Model
Company DescriptionCompanhia De Saneamento (SBS) is a leading sanitation company focused on providing essential water supply and wastewater treatment services. Operating primarily in urban areas, SBS is dedicated to enhancing public health and environmental sustainability through its comprehensive sanitation solutions. The company engages in the management of water resources, ensuring effective distribution and treatment processes, while also investing in infrastructure development to meet growing demand.
How the Company Makes MoneySBS 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 Earnings Call Summary
Earnings Call Date:Aug 11, 2025
(Q3-2024)
| % Change Since: 5.02%|
Next Earnings Date:Nov 10, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed picture. While there were positive developments in revenue and EBITDA growth, operational cash generation, and new strategic directions post-privatization, significant challenges remain. These include regulatory impacts, transition costs, and construction delays. The company is focused on overcoming these hurdles with a new management team and investment strategies.Q3-2024 Updates
Positive Updates
Revenue and EBITDA Growth
Net revenue increased by 7%, and EBITDA grew by 17% driven by a 2% increase in volume and pricing adjustments.
Operational Cash Generation
Generated operational cash of BRL 1.6 billion, which was almost entirely reinvested in the asset base.
Strategic Privatization and Transition
Privatization process enabled SABESP to transition from a state-owned model to a private one, allowing for potential operational and financial improvements.
Investment Program
Completion of BRL 1.4 billion investment this quarter with a significant investment program planned, including over BRL 60 billion for universalization of services.
Formation of New Management Team
New management team established to guide SABESP through privatization and operational transformation.
Negative Updates
Impact of Regulatory Adjustments
Revenue impacted by regulatory adjustments, including a 1% tariff reduction post-privatization.
Concession Contract Challenges
New concession contract presents challenges with regulatory parameters and tariff reviews.
Transition and Non-Recurring Costs
Incurred costs associated with privatization and transition, leading to non-recurring effects on operations.
Gap in Commercial Programs
Identified gaps in commercial programs leading to approximately 500 contract terminations.
Construction Delays
Delays in construction works attributed to transition period, with ongoing efforts to accelerate execution.
Company Guidance
During the Q3 2024 earnings call for SBSP3.SA, the management team provided comprehensive guidance on several financial metrics and strategic initiatives. Daniel Szlak, the CFO, detailed a 7% increase in net revenue, translating into a 17% rise in EBITDA, driven by a 2% growth in volume and pricing adjustments. The company reported a gross revenue impact of approximately BRL 8.8 billion due to deferred revenue adjustments under IFRS 12. Operational cash generation stood at BRL 1.6 billion, reinvested into the asset base. The privatization transition incurred non-recurring costs, yet the company saw a 6.4% tariff readjustment, netting a positive effect of around 5%. Additionally, SABESP completed BRL 1.4 billion in investments this quarter, with expectations to reach BRL 6.5 to 7 billion by year-end, despite transitioning from public to private procurement processes. The call also highlighted the company's strategic focus on universal sanitation, cost control, and an efficient capital structure, aiming to leverage a planned BRL 60 billion investment over five years.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.85
Very Positive
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.78
Positive
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.72
Positive
| 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
Positive
21.33
Price Trends
20.60
Positive
20.13
Positive
18.08
Positive
Market Momentum
0.36
Negative
55.46
Neutral
38.54
Neutral
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 21.33 is above the 20-day moving average (MA) of 20.51, above the 50-day MA of 20.60, and above the 200-day MA of 18.08, indicating a bullish trend. The MACD of 0.36 indicates Negative momentum. The RSI at 55.46 is Neutral, neither overbought nor oversold. The STOCH value of 38.54 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for SBS.
Companhia De Saneamento Risk Analysis
Companhia De Saneamento disclosed 39 risk factors in its most recent earnings report. Companhia De Saneamento reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Companhia De Saneamento Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $10.99B | 16.77 | 10.02% | 3.36% | 20.70% | 14.59% | |
76 Outperform | $14.39B | 7.24 | 30.12% | 2.61% | 30.74% | 143.94% | |
71 Outperform | $2.81B | 20.57 | 8.49% | 2.61% | 0.62% | -24.24% | |
71 Outperform | $29.35B | 26.14 | 10.40% | 2.19% | 13.37% | 13.29% | |
69 Neutral | $1.78B | 16.52 | 7.50% | 1.68% | 12.40% | 11.98% | |
66 Neutral | $2.89B | 23.01 | 13.77% | 2.53% | 8.55% | 13.57% | |
62 Neutral | C$8.32B | -6.40 | -16.78% | 4.55% | -2.14% | -200.32% |
* Utilities Sector Average
Performance Comparison
SBS
Companhia De Saneamento
21.33
3.67
20.78%
AWR
American States Water
74.58
-4.15
-5.27%
AWK
American Water
145.87
8.72
6.36%
WTRG
Essential Utilities
39.22
1.32
3.48%
CWT
California Water Service
46.77
-5.45
-10.44%
HTO
H2O America
50.06
-6.39
-11.32%
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.