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1. Company Snapshot

1.a. Company Description

SJW Group, through its subsidiaries, provides water utility services in the United States.It engages in the production, purchase, storage, purification, distribution, wholesale, and retail sale of water and wastewater services.The company also provides non-tariffed services, including water system operations, maintenance agreements, and antenna site leases; contracted services and sewer operations to water utilities; and a Linebacker protection plan for public drinking water customers in Connecticut and Maine.


Its water supply consists of groundwater from wells, surface water from watershed run-off and diversion, reclaimed water, and imported water purchased from the Santa Clara Valley Water District.The company offers water service to approximately 231,000 connections that serve approximately one million people residing in portions of the cities of San Jose and Cupertino, as well as in the cities of Campbell, Monte Sereno, Saratoga, and the Town of Los Gatos; and adjacent unincorporated territories in the County of Santa Clara in the State of California.In addition, it provides water service to approximately 140,000 connections, which serve approximately 456,000 people in 81 municipalities with a service area comprising approximately 269 square miles throughout Connecticut and Maine, as well as approximately 24,000 connections that serve approximately 70,000 people in a service area comprising approximately 266 square miles in the region between San Antonio and Austin, Texas; and approximately 3,000 wastewater connections in Southbury, Connecticut.


Further, the company owns undeveloped land in California and Tennessee; and owns and operates commercial buildings and warehouse properties in Tennessee.The company was formerly known as SJW Corp.and changed its name to SJW Group in November 2016.


SJW Group was incorporated in 1985 and is headquartered in San Jose, California.

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1.b. Last Insights on SJW

SJW Group's recent performance was negatively driven by the consistent increase in the number of shares issued by the company over the past decade, reducing returns for investors. This long-term underperformance compared to the benchmark makes it less suitable for decade-long investments. Additionally, the company's debt management and growth prospects, which were previously seen as positives, may not be enough to offset the negative impact of share dilution.

1.c. Company Highlights

2. H2O America Delivers Strong Q3 2025 Earnings

H2O America reported a robust financial performance in the third quarter of 2025, with adjusted diluted earnings per share (EPS) of $1.27, representing an 8% increase over the same period in 2024. The company's revenues grew 7% to driven by rate increases and higher pass-through water costs. The actual EPS came out at $0.708, beating analyst estimates of $0.65. The year-to-date adjusted EPS stood at $2.53 per share, a 14% increase over the nine months ended September 2024. The company's financial performance reflects its continued execution of its growth strategy, focusing on water infrastructure investments across its national footprint.

Publication Date: Nov -24

📋 Highlights
  • Adjusted EPS Growth:: 8% increase to $1.27 per share QoQ, driven by rate increases, usage growth, and AFUDC equity.
  • Capital Investment Progress:: $358 million invested in infrastructure through September 2025 (74% of $486M budget), including Texas acquisitions.
  • Cibolo Valley Acquisition:: Added 1,500 active connections and potential for 250 more, enhancing Texas growth prospects.
  • 2025 EPS Guidance:: Narrowed to $2.95–$3 (upper half of original range), reflecting disciplined execution and CapEx progress.
  • Environmental Performance:: 43% reduction in Scope 1/2 emissions since 2019 and 73% increase in solar generation, supporting ESG goals.

Operational Highlights

The company has invested $358 million in water and wastewater utility infrastructure across all four states through September 30th, accounting for 74% of its upwardly revised $486 million budget. Notable developments include the announcement of two Texas deals, the Quadvest deal, and the tuck-in acquisition of Cibolo Valley wastewater treatment plant. The Quadvest deal approval process remains ongoing, with the fair market valuation determination expected in December. The acquisition of Cibolo Valley wastewater treatment plant is expected to bring approximately 1,500 active connections and opportunities for more than 250 additional ones.

Regulatory Updates and Growth Prospects

Bruce Hauk provided updates on key state regulatory developments, including the approval of Connecticut Water's Infrastructure and Conservation Adjustment and the filing of a rate design proposal in Maine. The company's growth prospects are further bolstered by its confidence in competing in the Texas water market, even with the potential acquisition of a Texas utility by Essential and American Water. The company's narrowed guidance implies lower earnings in the fourth quarter due to the timing of gross margin, regulatory adjustments, higher expenses, and depreciation.

Valuation and Outlook

With a P/E Ratio of 14.55 and a P/B Ratio of 1.04, the company's valuation appears reasonable. The Dividend Yield stands at 3.76%, indicating an attractive return for income investors. Analysts estimate next year's revenue growth at 1.1%. The company's refreshed long-term guidance, including the 5% to 7% EPS growth rate, will be updated along with its CapEx schedule. The Quadvest acquisition and CapEx refresh are expected to impact the long-term growth rate.

3. NewsRoom

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SJW (HTO) Could Be a Great Choice

May -13

Source: zacks.com

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SJW Group Rebrands as H2O America

May -06

Source: globenewswire.com

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SJW Group: Great Total Return Potential And Safety

Apr -30

Source: seekingalpha.com

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SJW Group (SJW) Q1 2025 Earnings Call Transcript

Apr -29

Source: seekingalpha.com

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SJW (SJW) Surpasses Q1 Earnings and Revenue Estimates

Apr -28

Source: zacks.com

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SJW Group Announces First Quarter 2025 Financial Results

Apr -28

Source: globenewswire.com

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3 Utility Stocks Set to Deliver 20%+ Returns in 2025

Apr -24

Source: 247wallst.com

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SJW (SJW) Expected to Beat Earnings Estimates: Should You Buy?

Apr -21

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.00%)

6. Segments

Water Utility Services

Expected Growth: 4%

SJW Group's Water Utility Services segment growth is driven by increasing water demand, infrastructure investments, and acquisitions. California's growing population and economy, coupled with water conservation efforts, contribute to steady revenue growth. Additionally, SJW Group's strategic acquisitions, such as the purchase of New Mexico Water, expand its customer base and enhance its growth prospects.

Real Estate Services

Expected Growth: 4%

SJW Group's Real Estate Services segment growth is driven by increasing demand for water infrastructure development, strategic acquisitions, and expansion into new markets. Additionally, favorable demographics, urbanization, and government initiatives to upgrade aging infrastructure are contributing to the segment's 4% growth.

7. Detailed Products

Water Utility Services

SJW Group provides water utility services to residential, commercial, and industrial customers through its subsidiaries, San Jose Water and SJWTX, Inc.

Wastewater Services

SJW Group offers wastewater services, including collection, treatment, and disposal of wastewater, through its subsidiaries, San Jose Water and SJWTX, Inc.

Real Estate Development

SJW Group develops and manages commercial and residential properties, including office buildings, retail centers, and residential communities.

Land Management

SJW Group manages and maintains large tracts of land, including open spaces, parks, and natural areas.

8. SJW Group's Porter Forces

Forces Ranking

Threat Of Substitutes

SJW Group operates in the water utility industry, which has a moderate threat of substitutes. While there are alternative sources of water, such as private wells and recycled water, they are not always available or cost-effective.

Bargaining Power Of Customers

SJW Group's customers have low bargaining power due to the essential nature of water services and the lack of alternative providers in many areas.

Bargaining Power Of Suppliers

SJW Group's suppliers, such as equipment and material providers, have low bargaining power due to the company's large scale and diversified supply chain.

Threat Of New Entrants

The threat of new entrants in the water utility industry is low due to the high barriers to entry, including significant capital requirements and regulatory hurdles.

Intensity Of Rivalry

The intensity of rivalry in the water utility industry is moderate, with a few large players competing for market share, but with limited opportunities for expansion.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 58.62%
Debt Cost 4.23%
Equity Weight 41.38%
Equity Cost 6.85%
WACC 5.31%
Leverage 141.66%

11. Quality Control: SJW Group 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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Aris Water Solutions

A-Score: 6.0/10

Value: 6.0

Growth: 8.6

Quality: 4.7

Yield: 5.0

Momentum: 8.5

Volatility: 3.3

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Artesian Resources

A-Score: 5.7/10

Value: 6.2

Growth: 4.7

Quality: 5.3

Yield: 7.0

Momentum: 2.0

Volatility: 9.3

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SJW

A-Score: 5.5/10

Value: 6.4

Growth: 5.6

Quality: 6.9

Yield: 4.0

Momentum: 3.5

Volatility: 6.7

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Pure Cycle

A-Score: 5.0/10

Value: 2.9

Growth: 6.3

Quality: 8.2

Yield: 0.0

Momentum: 5.5

Volatility: 7.3

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Middlesex Water

A-Score: 4.9/10

Value: 3.7

Growth: 5.7

Quality: 6.4

Yield: 4.0

Momentum: 2.0

Volatility: 7.7

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Global Water Resources

A-Score: 4.9/10

Value: 4.0

Growth: 4.8

Quality: 6.6

Yield: 4.0

Momentum: 2.0

Volatility: 7.7

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

54.86$

Current Price

54.86$

Potential

-0.00%

Expected Cash-Flows