The Prudent Investor


A Quick Look at Southwest Water
January 12, 2007, 9:07 am
Filed under: Water Utilities

The fifth company in our examination is Southwest Water (NASDAQ:SWWC), with a market capitalization of $300M. We are getting smaller and smaller.

Yahoo Finance offers the following description:

Southwest Water Company, together with its subsidiaries, provides a range of services, including water production, treatment, and distribution; wastewater collection and treatment; utility billing and collection; utility infrastructure construction management; and public works services. The company operates in two groups, Utility and Services. The Utility group supplies water for residential, business, industrial, and public authority use, as well as for fire protection service in California, Texas, and New Mexico; and sewage collection and treatment services for residential, commercial, and irrigation use in Texas and New Mexico. The Services group provides water and wastewater facility operations and maintenance services; equipment maintenance and repair; sewer pipeline cleaning; billing and collection services; and state-certified water and wastewater laboratory analysis on a contract basis.

With a current price of $13.56, the company exhibits numbers that look pretty good. A P/E of 38.9 is a bit on the high side, and the highest we will see in this comparison. If that was the only number I was looking at then the company would be tossed, but there are some very positive numbers available. The PEG of 3.5 is comparible with the industry average, but a P/S of 1.5 is definitely the lowest of the group. Quarterly Revenue Growth is 10%, which is the highest of the group, so these two numbers factor in a very positive way. The Dividend Yield of 1.6% is of little consequence, and the Debt/Equity ratio of 0.8 offers comfort.

The 2006 char shows the company starting the year at $15, quickly ramping up to $19, then just as quickly falling to $11 during the first half of the year, and during the second half of the year it has bounced back and forth between $12 and $14.

With these numbers, Southwest Water Company retains a nice slot in our comparison.

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