The Prudent Investor

A Quick Look at California Water Service Group
January 9, 2007, 8:04 am
Filed under: Water Utilities

Next is an examination of California Water Service Group (NYSE:CWT), with a market cap of $800 Million.

Yahoo Finance offers the following description:

California Water Service Group, through its subsidiaries, operates in the water utility industry in the United States. The company engages in the production, purchase, storage, treatment, testing, distribution, and sale of water for domestic, industrial, public, and irrigation uses, as well as for fire protection. It also provides non regulated water-related services, including water system operation, billing, meter reading, lab services, water rights brokerage services, and communication antenna sites leasing under agreements with municipalities and other private companies. As of February 22, 2006, California Water Services served 2 million people in 100 communities.

With a current price of $39.78, the company exhibits numbers slightly better than Aqua America. A P/E of 28.6 is slightly lower than the industry average. The PEG matches the industry average of 3.4, but very significant is the P/S of 2.5, which is significantly lower than the industry’s 3.6, and well less than half of WTR’s 5.8. Quarterly Revenue Growth lags the industry and WTR at 6.6%, the Dividend Yield is close to WTR at 1.2%, and Debt/Equity at 1. None of these values stand out as exceptional or troublesome.

The 2006 chart shows a high of around $45 in early May, dropping over a two month period to $34, and a slow steady recovery to the current $40 level.

Of positive significance is the price to sales ratio, and of negative significance is its lagging revenue growth. Nothing jumps out at me immediately one way or the other, so it will stay in the running for now.


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