Back to top

Image: Shutterstock

Reasons to Add Global Water Resources (GWRS) to Your Portfolio

Read MoreHide Full Article

Global Water Resources Inc.’s (GWRS - Free Report) ongoing investments to strengthen infrastructure, expand operations through an inorganic route and increase water connections are expected to drive its performance over the long run.

Let’s focus on the factors that make this Zacks Rank #2 (Buy) stock a strong investment pick at the moment. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Growth Projection & Surprise History

The Zacks Consensus Estimate for Global Water Resources’ 2022 earnings has moved up by 25% in the past 60 days to 20 cents per share. The Zacks Consensus Estimate for GWRS’ 2023 earnings has moved up by 5% in the past 60 days to 21 cents per share.

Global Water Resources’ long-term (three to five years) earnings growth is projected at 15%.

Global Water Resources delivered an average earnings surprise of 154.2% in the last four quarters.

Investments

Global Water Resources is accelerating capital investments for upgrading and maintaining infrastructure. The company invested $6.2 million in infrastructure projects in the first quarter to fulfill the ongoing commitment of strategic capital expansions. In the first three months of 2022, capital expenditures increased by 88.7% to $6.2 million compared with the year-ago quarter. The increase in capital expenditures is tied to the capital expenditure program, which is causing GWRS to spend more on capex compared with the prior year.

Acquisitions & Customer Growth

Global Water Resources is making significant progress by adding new water connections through acquisitions. Global Water Resources expanded its footprint in the first quarter of 2022 by acquiring the assets of Rincon Water Company. These acquisitions added a total of 91 connections and nearly 9.1 square miles of service area to the company’s regional and growing footprint. On Apr 18, 2022, GWRS signed a definitive agreement to acquire Farmers Water Company. The acquisition, when completed, will add approximately 3,300 active water service connections and nearly 21.5 square miles of service area.

Global Water Resources is continuously witnessing customer growth, with total active connections growing by 9.7% year over year, of which 7.1% was organic growth and 2.6% was primarily related to the acquisition of Las Quintas Serenas.

Return on Equity

Return on Equity (ROE) indicates how efficiently a company is utilizing shareholders’ funds in the business to generate returns. At present, Global Water Resources’ ROE is 11.6%, higher than the industry average of 9.6%. This indicates that the company is utilizing the funds more effectively than industry peers.

Price Performance

In the past two years, Global Water Resources’ stock has rallied 32.4% compared with the industry’s 20.5% rise.

Zacks Investment Research
Image Source: Zacks Investment Research

Other Stocks to Consider

Some other similar-ranked stocks from the same sector include Primo Water (PRMW - Free Report) , Dominion Energy (D - Free Report) and Hawaiian Electric Industries (HE - Free Report) .

Primo Water delivered an average earnings surprise of 4.5% in the last four quarters. The Zacks Consensus Estimate for Primo Water’s 2022earnings per share (EPS) has moved up 12.5% year over year. PRMW’s current dividend yield is 2%, better than the Zacks S&P composite average of 1.5%.

Dominion Energy delivered an average earnings surprise of 0.65% in the last four quarters. The Zacks Consensus Estimate for Dominion Energy’s 2022 EPS has moved up 6.7% year over year. D’s long-term earnings growth is 6.3%.

Hawaiian Electric Industries delivered an average earnings surprise of 30.8% in the last four quarters. The Zacks Consensus Estimate for Hawaiian Electric’s 2023 EPS has moved up 4.6% year over year. HE’s long-term earnings growth is 3.2%.