Companhia De Saneamento (SBS) AI Stock Analysis

• Market Cap: $13.10B
• Dividend Yield: 2.84%
• Average Volume (3M): 990.33K
• Price to Earnings (P/E): 7.2
• Beta (1Y): 0.40
• Revenue Growth: 26.64%
• EPS Growth: 151.43%
• Country: US
• Employees: 10,552
• Sector: Utilities
• Sector Strength: 80
• Industry: Regulated Water
• EPS (TTM): 0.30
• Shares Outstanding: 683,509,900
• 10 Day Avg. Volume: 1,075,753
• 30 Day Avg. Volume: 990,331
• PEG Ratio: 1.08
• Price to Book (P/B): 1.99
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 10.98
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $23.20
• Price Target Upside: 20.33% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 1

• Rating: 72 Outperform
• Price Target: $22.00 ▲(14.11%Upside)

The overall stock score of 71.9 reflects strong financial performance with robust revenue and profit growth. Valuation metrics suggest the stock is attractively priced. However, technical analysis indicates bearish momentum, which could pose short-term risks. The absence of new significant corporate events or earnings call data means these factors do not influence the score.

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 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 through the provision of water supply and sewage treatment services. The company's primary revenue streams include charges for water consumption and sewage services, which are billed to residential, commercial, and industrial customers. Additionally, SBS may receive government subsidies or funding for infrastructure projects aimed at expanding and maintaining its service network. The company may also engage in partnerships with municipalities and other entities to enhance service delivery and infrastructure development, contributing to its revenue.

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

Companhia De Saneamento Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 19.28
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SBS, the sentiment is Negative. The current price of 19.28 is below the 20-day moving average (MA) of 20.03, below the 50-day MA of 20.51, and above the 200-day MA of 17.72, indicating a neutral trend. The MACD of -0.37 indicates Positive momentum. The RSI at 39.06 is Neutral, neither overbought nor oversold. The STOCH value of 33.20 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for SBS.

Companhia De Saneamento Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
WTRG	74 Outperform	$10.32B	16.51	9.78%	3.54%	16.41%	5.65%
AWK	72 Outperform	$27.49B	25.66	10.40%	2.23%	13.37%	13.29%
SBS	72 Outperform	$13.10B	7.17	28.57%	2.84%	26.64%	151.43%
Sector *	72 Outperform	€12.98B	45.98	11.98%	4.61%	0.14%	7.58%
HTO	71 Outperform	$1.66B	15.89	7.50%	3.40%	12.40%	11.98%
CWT	67 Neutral	$2.68B	19.75	8.24%	2.67%	0.62%	-24.24%
AWR	62 Neutral	$2.82B	22.59	13.95%	2.53%	6.79%	5.96%