Companhia De Saneamento (SBS) AI Stock Analysis

• Market Cap: $14.25B
• Dividend Yield: 2.62%
• Average Volume (3M): 1.08M
• Price to Earnings (P/E): 7.8
• Beta (1Y): 0.38
• Revenue Growth: 26.64%
• EPS Growth: 151.43%
• Country: US
• Employees: 10,552
• Sector: Utilities
• Sector Strength: 84
• Industry: Regulated Water
• EPS (TTM): 0.30
• Shares Outstanding: 683,509,900
• 10 Day Avg. Volume: 909,254
• 30 Day Avg. Volume: 1,082,889
• PEG Ratio: 0.35
• Price to Book (P/B): 1.41
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 9.89
• 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: 11.43% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 1

• Rating: 76 Outperform
• Price Target: ―

Companhia De Saneamento's overall stock score reflects strong financial performance and attractive valuation. The company's robust revenue and profit growth demonstrate effective management and operational efficiency. The stock's technical indicators show positive momentum, though caution is warranted due to overbought signals. The low P/E ratio suggests potential undervaluation, making it an appealing investment opportunity. However, the absence of current earnings call data and corporate events limits further insight into the company's short-term prospects.

Positive Factors

Earnings

Sabesp reported a strong 4Q24 results with R$3bn adj. EBITDA, up 4% YoY and 6% above analyst estimates.

Operational Efficiency

The strong 4Q24 results were mostly driven by faster-than-expected cost-cutting initiatives.

Regulatory Environment

Change in regulation could add R$4-6bn NPV, positively impacting Sabesp's financials by fixing delays on capex recognition.

Negative Factors

Market Position

Despite being a top pick within Brazilian Utilities, Sabesp's market position could face challenges without continued operational improvements.

Regulatory Uncertainty

The end of the revenue gap is not seen as a risk, but regulatory changes and initiatives could impact financial stability if not managed well.

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

SABESP generates revenue primarily through the provision of water supply and sewage services. The company charges its customers based on water consumption and sewage generation, with a tiered pricing model that varies by customer category, such as residential, commercial, or industrial. This pricing model is typically regulated by state authorities to ensure affordability and fairness. In addition to direct service charges, SABESP may also engage in infrastructure projects, partnerships, and government contracts that contribute to its revenue. Additionally, the company may receive financial support or subsidies from government entities to undertake large-scale infrastructure investments aimed at expanding and improving its service network.

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
	EBIT
15.51B	6.35B	4.62B	4.10B	4.49B
	EBITDA
18.11B	8.96B	8.06B	6.28B	4.16B
	Net Income Common Stockholders
9.58B	3.52B	3.12B	2.31B	973.32M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
5.38B	3.27B	3.55B	3.15B	3.81B
	Total Assets
80.97B	61.47B	57.21B	53.17B	50.42B
	Total Debt
25.26B	19.54B	18.96B	17.72B	17.26B
	Net Debt
23.58B	18.70B	17.09B	17.01B	16.86B
	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: Positive
• Last Price: 20.82
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• 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 20.82 is above the 20-day moving average (MA) of 20.64, above the 50-day MA of 19.83, and above the 200-day MA of 17.15, indicating a bullish trend. The MACD of 0.22 indicates Positive momentum. The RSI at 57.00 is Neutral, neither overbought nor oversold. The STOCH value of 83.58 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
AWK	77 Outperform	$27.42B	25.60	10.43%	2.34%	11.79%	11.69%
SBS	76 Outperform	$14.25B	7.77	28.57%	2.62%	26.64%	151.43%
WTRG	75 Outperform	$10.68B	17.09	9.78%	3.39%	16.41%	5.65%
HTO	74 Outperform	$1.83B	17.77	7.49%	3.14%	12.34%	11.78%
AWR	69 Neutral	$3.01B	24.14	13.95%	2.37%	6.79%	5.96%
Sector *	64 Neutral	$8.62B	10.39	4.24%	4.63%	4.07%	-13.04%
CWT	63 Neutral	$2.78B	20.50	8.67%	2.57%	3.83%	-8.75%