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1. Company Snapshot

1.a. Company Description

Pure Cycle Corporation designs, constructs, operates, and maintains water and wastewater systems in the Denver metropolitan area and Colorado Front Range in the United States.It operates in two segments, Wholesale Water and Wastewater Services, and Land Development.The company engages in the wholesale water production, storage, treatment, and distribution systems; wastewater collection and treatment systems; development of master-planned community; and oil and gas leasing business.


It serves domestic, commercial, and industrial customers in the Denver metropolitan region.Pure Cycle Corporation was founded in 1976 and is based in Watkins, Colorado.

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1.b. Last Insights on PCYO

The recent 3-month performance of Pure Cycle Corporation was negatively impacted by the lack of commercial development at Sky Ranch, a key growth driver. Despite promising tap fees and land sales, the company's revenue streams from the oil & gas industry have been stagnant since 2018. The absence of significant progress in commercial development has hindered the company's ability to generate substantial revenue, leading to a disappointing performance.

1.c. Company Highlights

2. Pure Cycle Corp. Surges to 27th Consecutive Profit, Eyes 2026 Expansion

Pure Cycle Corporation closed Q2 2026 with $5.1 million in revenue, up 36% YoY, and a net income of $1.2 million, translating to $0.05 EPS. Gross profit reached $2.8 million, driven by a robust delivery of lots and a thriving water segment. The company’s guidance remains intact with $14.3 million total revenue and $9 million profit forecast for the year.

Publication Date: Apr -14

📋 Highlights
  • Strong H1 2026 Performance:: Generated $5.1M revenue and $2.8M gross profit, with $1M+ net income and 36% YoY EPS growth ($0.05).
  • Water Segment Leadership:: Drives 44% of total assets ($74–75M) with 4% development, serving 60,000+ connections and $2.5–3B potential value.
  • Land Development Growth:: Sky Ranch project delivers lots to homebuilders, with $100K–110K revenue gain per lot resold to builders.
  • Interchange Project Timeline:: 30% design complete, $26–30M revenue guidance for 2026, and construction planned for 2027–2028.
  • Rental Segment Strategy Shift:: Reduced growth from 90 to 60 units due to affordability concerns, maintaining 8–10% returns with $3K/month rents.

Revenue Growth Across Segments

Water sales surged thanks to connection fees and a multiyear contract with oil and gas operators, while the industrial arm benefited from increased drilling activity. Land development, particularly Sky Ranch, delivered lots to national builders, adding $100‑$110 k per lot. Single‑family rentals grew, though the company capped expansion from 90 to 60 units to preserve ROI.

Profitability and Margins

Gross margin held steady at 55%, supported by high water service fees and efficient lot deliveries. Net income margin improved to 23%, reflecting disciplined cost management and a strong balance sheet that fuels asset monetization and shareholder value creation.

Segment Performance Highlights

The water segment, comprising 44% of total assets, remains underdeveloped at 4%, yet its $74‑$75 million asset base positions it for future revenue spikes. Land development is 20% complete, with commercial opportunities and an upcoming interchange poised to unlock additional value.

Asset Monetization Strategy

Pure Cycle is actively marketing commercial properties, targeting retail, industrial, and distribution centers. The interchange project, 30% complete, is slated for 2028 completion, and refinancing of Phase 2 bonds is expected to free $10‑12 million in receivables, while $20 million of new financing will fund Phase III.

Future Outlook and Guidance

Guidance for 2026 projects $26‑30 million in gross revenue and $0.43‑$0.52 EPS. The company plans to reinvest and repurchase shares, believing the stock is undervalued. A disciplined land acquisition approach and a focus on high‑return assets underpin the long‑term growth strategy.

Valuation Snapshot

With a P/E of 19.32, P/B of 1.82, and EV/EBITDA of 13.68, Pure Cycle trades at a modest premium to its peers. ROIC stands at 5.65% and ROE at 9.75%, while net debt/EBITDA is only 0.16, underscoring financial flexibility and a solid value proposition for investors.

3. NewsRoom

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Pure Cycle Corp (PCYO) Stock Down 5.3% -- Now Undervalued? GF Score: 78/100

Apr -10

Source: gurufocus.com

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Pure Cycle Corporation (PCYO) Q2 2026 Earnings Call Transcript

Apr -09

Source: seekingalpha.com

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Pure Cycle Announces Financial Results For the Three and Six Months Ended February 28, 2026

Apr -08

Source: globenewswire.com

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Pure Cycle Corporation Announces Dates for Q2 2026 Earnings Presentation

Mar -30

Source: globenewswire.com

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Pure Cycle Regains Momentum From Oil And Gas And A Clearer Strategy

Jan -28

Source: seekingalpha.com

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Pure Cycle Corporation Appoints Daniel J. Roller to its Board of Directors

Jan -15

Source: globenewswire.com

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Pure Cycle Corporation (PCYO) Q1 2026 Earnings Call Transcript

Jan -08

Source: seekingalpha.com

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Pure Cycle Announces Financial Results for the Three Months Ended November 30, 2025

Jan -07

Source: globenewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (9.40%)

6. Segments

Water and Wastewater Resource Development

Expected Growth: 8.5%

Growing demand for sustainable water management solutions, increasing adoption of eco-friendly practices, and government initiatives promoting water conservation drive the growth of Pure Cycle Corporation's Water and Wastewater Resource Development segment.

Land Development

Expected Growth: 10.3%

Growing demand for single-family and multi-family homes, increasing urbanization, and strategic land acquisition and entitlement processes drive Pure Cycle Corporation's Land Development segment growth.

Single-family Rental

Expected Growth: 4.5%

Growing demand for single-family rentals, driven by increasing housing costs and changing demographics, coupled with Pure Cycle Corporation's diversified portfolio, provides a stable source of income and attractive investment opportunity.

7. Detailed Products

Water

Pure Cycle Corporation provides water for municipal, industrial, and agricultural uses.

Land Development

The company develops land for residential, commercial, and industrial uses.

Wastewater Treatment

Pure Cycle Corporation offers wastewater treatment services for municipal and industrial clients.

Water Recycling

The company provides water recycling services to conserve water and reduce waste.

Landfill Leachate Treatment

Pure Cycle Corporation treats landfill leachate to protect the environment.

8. Pure Cycle Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Pure Cycle Corporation operates in the water industry, which has few substitutes. However, the company's water conservation efforts and efficient use of resources may reduce the threat of substitutes.

Bargaining Power Of Customers

Pure Cycle Corporation's customers are primarily municipalities and industrial users, which have limited bargaining power due to the company's unique water conservation solutions.

Bargaining Power Of Suppliers

Pure Cycle Corporation relies on a few key suppliers for its water treatment and infrastructure needs. While the company has some bargaining power, suppliers may still exert some influence.

Threat Of New Entrants

The water industry has high barriers to entry, including significant capital requirements and regulatory hurdles. This limits the threat of new entrants for Pure Cycle Corporation.

Intensity Of Rivalry

Pure Cycle Corporation operates in a competitive industry, but its focus on water conservation and efficient use of resources helps to differentiate it from rivals.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 5.80%
Debt Cost 3.95%
Equity Weight 94.20%
Equity Cost 8.71%
WACC 8.44%
Leverage 6.15%

11. Quality Control: Pure Cycle Corporation passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Artesian Resources

A-Score: 6.1/10

Value: 6.5

Growth: 4.7

Quality: 5.4

Yield: 7.0

Momentum: 3.5

Volatility: 9.7

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SJW

A-Score: 5.9/10

Value: 6.6

Growth: 5.3

Quality: 5.9

Yield: 5.0

Momentum: 6.0

Volatility: 6.7

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Aris Water Solutions

A-Score: 5.5/10

Value: 6.3

Growth: 8.6

Quality: 4.6

Yield: 5.0

Momentum: 4.5

Volatility: 4.0

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Global Water Resources

A-Score: 5.2/10

Value: 4.9

Growth: 4.7

Quality: 6.6

Yield: 6.0

Momentum: 2.0

Volatility: 7.3

1-Year Total Return ->

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Pure Cycle

A-Score: 4.7/10

Value: 2.7

Growth: 6.1

Quality: 8.1

Yield: 0.0

Momentum: 3.5

Volatility: 8.0

1-Year Total Return ->

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Middlesex Water

A-Score: 4.6/10

Value: 2.9

Growth: 5.7

Quality: 5.2

Yield: 5.0

Momentum: 2.5

Volatility: 6.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

11.44$

Current Price

11.44$

Potential

-0.00%

Expected Cash-Flows