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Here's Why You Should Add SJW Group (SJW) to Your Portfolio Now

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SJW Group’s (SJW - Free Report) consistent investments to strengthen its existing infrastructure and expand operations increase earnings predictability. The company’s search for opportunistic water and wastewater system acquisitions will continue to support its growth potential. Given its strong dividend history and growth opportunities, SJW Group makes for a solid investment option in the utility sector.

Let’s focus on the factors that make this Zacks Rank #2 (Buy) stock a strong investment option at the moment.

Growth Projections & Surprise History

The Zacks Consensus Estimate for 2023 earnings per share (EPS) has moved up 0.8% in the past 30 days to $2.47. This implies a year-over-year increase of 2.1%.

SJW reported first-quarter 2023 EPS of 37 cents, which surpassed the Zacks Consensus Estimate of 24 cents by 54.2%. It delivered an average earnings surprise of 11.95% in the last four quarters.

Return on Equity

Return on equity (ROE) indicates how efficiently a company has been utilizing the funds to generate higher returns. Currently, SJW Group’s ROE is 7.8%, higher than the sector’s average of 6.6%. This indicates that the company has been utilizing the funds more constructively than its peers in the utility sector.

Dividend Growth

SJW has been consistently paying dividend and increasing its shareholders’ value. In the past five years, the company has increased its dividend five times on a year-over-year basis for an average annual increase of 6.43%.

In May 2023, SJW’s board of directors approved a quarterly dividend of 38 cents per share, resulting in an annualized dividend of $1.52 per share. Its current dividend yield is 2.01%, better than the Zacks S&P 500 Composite’s yield of 1.54%.  At present, the company’s dividend payout is 57%.

Systematic Investments & Customer Growth

SJW Group plans to invest more than $1.4 billion over the next five years to build and maintain its water and wastewater operations. During the first quarter of 2023, the company invested $52.4 million in infrastructure and water supply.

Water Utility Services’ estimated capital expenditures for 2023, exclusive of capital expenditures financed by customer contributions and advances, are anticipated to be approximately $255 million.

SJW witnessed an approximately 1% increase in customers in the first quarter from the year-ago period’s number.

Price Performance

In the last six months, the SJW Group stock returned 2.2% against the industry’s average 4.3% decline.

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Other Stocks to Consider

A few other top-ranked stocks from the same industry are Global Water Resources, Inc. (GWRS - Free Report) , IDACORP, Inc (IDA - Free Report) and NiSource Inc. (NI - Free Report) , each holding a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

GWRS’ long-term (three to five years) earnings growth rate is currently pinned at 15%. The consensus estimate for 2023 EPS stands at 31 cents, indicating year-over-year growth of 29.2%.

IDA’s long-term earnings growth is pegged at 3.68%. The Zacks Consensus Estimate for 2023 EPS stands at $5.10. The company delivered an average earnings surprise of 4.6% in the last four quarters.

NI’s long-term earnings growth rate is pegged at 6.9%. The Zacks Consensus Estimate for 2023 EPS stands at $1.57, implying a year-over-year improvement of 6.8%.

 


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