California Water Service Group’s CWT infrastructure investments and efficient services are expected to help expand its customer base and boost its demand. The company is expanding its operations through acquisitions that will further improve its performance. Given its growth opportunities, CWT makes for a solid investment option in the utility sector.
Let’s focus on the factors that make this currently Zacks Rank #1 (Strong Buy) company a strong investment pick at the moment.
Growth Projections & Surprise History
The Zacks Consensus Estimate for 2024 earnings per share (EPS) has moved up 40% in the past 30 days to $3.15.
The Zacks Consensus Estimate for 2024 revenues is pegged at $951.5 million, which indicates year-over-year growth of 19.7%.
The company delivered an average earnings surprise of 85.2% in the last four quarters.
Debt Position
Currently, California Water’s total debt to capital is 47.55%, better than the industry’s average of 54.76%.
The time to interest earned ratio at the end of the first quarter of 2024 was 3.2. The ratio, being greater than one, reflects CWT’s ability to meet future interest obligations without difficulties.
Dividend History
The utility company has been consistently paying dividends to its shareholders. It has been increasing dividends every year since the initiation of its dividend payment. Currently, its quarterly dividend is 28 cents per share, resulting in an annualized dividend of $1.12 per share.
This marks its 317th consecutive quarterly dividend. On a long-term basis, California Water aims to achieve a dividend payout ratio of 60%. Currently, its dividend yield is 2.12%, better than the Zacks S&P 500 composite’s yield of 1.3%.
Systematic Investments
California Water’s systematic investment plans in infrastructure will help it further provide customers with efficient water and wastewater services. In the first quarter of 2024, the company made capital investments of $109.8 million, up 34% year over year. The estimated capital expenditure for 2024 is $380 million.
Price Performance
In the past three months, shares of California Water have risen 11.5% compared with the industry’s 5.6% growth.
Image Source: Zacks Investment Research
Other Stocks to Consider
A few other top-ranked stocks from the same sector are DTE Energy DTE, PNM Resources PNM and Pinnacle West Capital PNW, each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
DTE’s long-term (three to five years) earnings growth rate is 6%. The Zacks Consensus Estimate for DTE Energy’s 2024 EPS implies a year-over-year rise of 16.8%.
PNM’s long-term earnings growth rate is 4.6%. The company delivered an average earnings surprise of 2.2% in the last four quarters.
PNW’s long-term earnings growth rate is 7.6%. The Zacks Consensus Estimate for 2024 EPS calls for a year-over-year improvement of 7.9%.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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