Back to top

Analyst Blog

Sao Paulo, Brazil-based Companhia de Saneamento Basico do Estado de Sao Paulo, or SABESP (SBS - Analyst Report) reported an increase of 31.3% in its net earnings as compared with the year-ago quarter. Earnings per share were R$0.69 (or 30 cents per ADR) in the quarter, up 30.2% year over year.


SABESP generated roughly R$2,772.4 million (US$1,216.0 million) in net revenue in the quarter, up 2.3% year over year. It was driven by demand for higher water supply, sewage collection and treatment.

Billed water and sewage volume in the third quarter 2013 went up 2.0% year over year to 925.0 million cubic meters. Of the total volume reported, roughly 57.6% represented water variation and about 42.4% came from sewage. The increase in billed water and sewage volume was due to higher number of connections and acceleration in consumption.

Water loss rate was at 25.0% versus 25.8% in the prior year quarter. Water volume produced decreased 0.5% year over year; water connections crept up 2.7% and sewage connections rose 3.4%.


SABESP’s cost of sales in the quarter increased 3.1% year-over-year and represented 59.2% of total revenue versus 58.7% in the year-ago quarter. Gross margin was at 40.8%. Operating expenses, including selling and administrative, decreased 24.7% year-over-year and represented 10.8% of the total revenue.

Adjusted EBITDA in the quarter was around R$1,041.9 million (US$457.0 million), up 15.5% year over year with a margin of 37.6%.

Balance Sheet

Exiting the third quarter 2013, SABESP had cash and cash equivalents balance of approximately R$1,828.8 million (US$820.1 million), up from R$1,669.1 million (US$748.5 million) in the previous quarter. Loans and financing increased 1.4% sequentially to R$8,379.2 million (US$3,757.5 million).

Cash Flow

SABESP’s net cash generated in the quarter increased 34.8% to R$753.1 million (US$330.3 million). Capitals spent on purchase of property, plant and equipment increased 16.3% to R$3.6 million (US$1.6 million).

Following its third quarter 2013 earnings announcement, SABESP maintained its position as one of the largest water and sewage services providers in the world, serving roughly 24.5 million customers for water and 21.3 million for sewage.

SABESP currently holds a Zacks Rank #5 (Strong Sell). Other companies to watch out for in the industry are Middlesex Water Co. (MSEX - Snapshot Report), with a Zacks Rank #1 (Strong Buy)., Two others - American Water Works Company, Inc. (AWK - Snapshot Report) and California Water Service Group (CWT - Snapshot Report), each carry a Zacks Rank #2 (Buy).

Please login to or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research


Are you a new Zacks Member or a visitor to

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
BITAUTO HOL… BITA 79.72 +2.56%
SOUTHWEST A… LUV 31.95 +2.27%
CHINA BIOLO… CBPO 47.40 +2.20%
GILEAD SCIE… GILD 104.51 +2.19%
YY ADS YY 87.57 +2.12%