Yahoo Finance Consolidated Water (CWCO) Rides on Technology & Acquisitions
Consolidated Water’s CWCO expanding operations via the full ownership of PERC and its most advanced technology to convert seawater to potable water are expected to drive earnings.
CWCO - which currently has a Zacks Rank #3 (Hold) - is subject to strict government regulations, foreign exchange risks and weather fluctuations.
Tailwinds
Consolidated Water utilizes Reverse Osmosis, one of the most advanced technologies, to convert seawater to potable water at all water treatment plants. The U.S. desalination market is growing, and this bodes well for the company’s prospects, given its focus on the development of desalination plants.
Consolidated Water aims to expand its operations in complementary service industries. It acquired a 100% interest in Aerex Industries, Inc., a U.S. original equipment manufacturer and service provider to municipal water, along with industrial water treatment. Given the past performance and present prospects of PERC, it is quite evident that acquiring its remaining 39% stake will improve CWCO’s performance.
The new contracts won by Consolidated Water in 2022, along with its existing water supply contracts, will drive its performance over the long term. The firm has maintained its current ratio above 1 for over a decade now. This indicates that CWCO is capable of addressing its short-term debt obligations without any difficulty.
Headwinds
CWCO’s business is subject to changes in demand for water services because of weather conditions, level of tourism and fluctuation in currency exchange rates as it has operations in four countries. The service segment’s revenues have suffered due to the inability to obtain new contracts or extend the old ones.
Stocks to Consider
Some better-ranked utilities in the same sector are Global Water Resources GWRS, Edison International EIX and NewJersey Resources NJR, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Global Water Resources, Edison International and NewJersey Resources’ 2023 earnings per share indicates year-over-year growth of 29.2%, 2.6% and 5.6%, respectively.
Long-term (three- to five-year) earnings growth of Global Water Resources, Edison International and NewJersey Resources is pegged at 15%, 3.9% and 6%, respectively.
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Edison International (EIX) : Free Stock Analysis Report
Consolidated Water Co. Ltd. (CWCO) : Free Stock Analysis Report
NewJersey Resources Corporation (NJR) : Free Stock Analysis Report
Global Water Resources, Inc. (GWRS) : Free Stock Analysis Report
