Sabesp

Sabesp (SBS - Analyst Report) is seeing revenue growth as it expands its infrastructure. The stock is cheap. SBS is trading at just 6.8x forward earnings.

Company Description

Sabesp supplies water services and sewage collection services to 60% of the State of Sao Paulo in Brazil. It services 366 out of 645 cities.

Since 2007, Sabesp has been expanding into new services related to environmental sanitation and energy.

From 2009 to 2013, the company expects to spend R$ 8.6 billion to expand infrastructure to cover the entire population of cities it currently services. By 2013 it expects to be treating 100% of water in cities it services.

Zacks Consensus Estimates Rise

Sabesp is scheduled to report third quarter results on Nov 18. Analysts have been bullish about the third quarter and 2009.

The third quarter Zacks Consensus Estimate is up 22 cents to $1.73 in the last 30 days.

The 2009 Zacks Consensus Estimate jumped 40 cents to $5.91 per share in the last month.

Analysts expect year over year earnings growth in 2009 of 54.84%.

Sabesp Surprised by 101.86% in the Second Quarter

Sabesp is coming off of a big beat. On Aug 7, the company reported second quarter earnings per share of $2.24 which easily surprised on the Zacks Consensus Estimate of $1.11. Net income surged 29.1% to R$464.7 million.

Revenue rose 7.3% to R$1,623.6 million from R$1,513.3 million in the second quarter of 2008. Billed water and sewage volume gained 3.2% year over year.

Value Fundamentals

Sabesp is a Zacks #1 Rank (strong buy) stock. It has a low price-to-book ratio of 0.86. The company also has a solid 5-year average return on equity of 10.29%.

Read the full analyst report on SBS