Zacks Investment Research upgraded
Companhia de Saneamento Basico do Estado de Sao Paulo, or
) to a Zacks Rank #1 (Strong Buy) on Mar 27, 2013. The company is
a Brazil-based water and sewage service provider and currently
has a market capitalization of $10.7 billion.
Why the Upgrade?
Financial results for the year 2012 posted by SABESP on Mar 21,
2013 were impressive. The company's earnings per share, as
reported by SABESP, were R$8.39, up 56.2% year over year. In ADR
terms, earnings came in at US$8.61.
Net revenue in the year inched up 8.2% to R$10.8 billion (US$5.5
billion) on the back of higher water supply, sewage collection
and treatment, and construction revenue. Billed water and sewage
volume rose 2.7% year over year. Water volume produced increased
2.2%; water connections crept up 2.6% and sewage connections rose
SABESP reported declines in cost and expenses in 2012. As a
percentage of revenue, cost of sales and services plummeted 60
basis points to 60.1%. Gross margin came in at 39.9%. Operating
expenses, including selling, administrative and other expenses
declined 7.2% year over year and represented 13.4% of the total
Solid financial results in 2012 and positive earnings surprise in
two out of four trailing quarters, with an average of +11.5%,
have raised our optimism for better results in the years ahead
for SABESP. In the last 7 days, the Zacks Consensus Estimate for
2013 went up by 8.9% to US$4.54 per ADR while that for 2014
increased 19.9% to US$5.18 per ADR. Also, we have an Earnings ESP
Zacks Earnings ESP: A Better Method
) of +7.7% for 2013.
Other Stocks to Consider
Other stocks to watch out for in the industry are
Aqua America Inc.
), with a Zacks Rank #1 (Strong Buy) while
American States Water Company
American Water Works Company, Inc.
), both carry Zacks Rank #2 (Buy).
AMER WATER WORK (AWK): Free Stock Analysis
AMER STATES WTR (AWR): Free Stock Analysis
SABESP -ADR (SBS): Free Stock Analysis Report
AQUA AMER INC (WTR): Free Stock Analysis
To read this article on Zacks.com click here.