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Zacks Industry Outlook Highlights California Water Service, The York Water and Global Water Resources
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For Immediate Release
Chicago, IL – August 29, 2025 – Today, Zacks Equity Research discusses California Water Service Group (CWT - Free Report) , The York Water Co. (YORW - Free Report) and Global Water Resources, Inc. (GWRS - Free Report) .
The companies under the Zacks Utility - Water Supply industry work around the clock to provide a reliable supply of clean drinking water and efficient sewer services to millions of people across the United States, essential resources for safeguarding public health and sanitation. Typically, water usage declines in the winter months as colder weather reduces outdoor consumption. Conversely, demand rises during the summer, driven by higher temperatures and increased outdoor activities.
The aging of pipelines is concerning, but water utilities continue with their upgrade and maintenance projects to minimize disruptions in operations. California Water Service Group, with its operations in California, strategic acquisitions and other organic efforts, is efficiently providing services to its customers. Other water utilities worth adding to your portfolio are The York Water Co. and Global Water Resources, Inc..
About the Utility-Water Supply Industry
The Zacks Utility - Water Supply industry consists of companies that provide drinking water and wastewater services to residential, commercial, industrial and military customers. Water utilities oversee a vast network of nearly 2.2 million miles of aging pipelines.
To ensure reliability and expand service, operators continually replace old infrastructure and invest in new pipeline systems. They also manage storage tanks, treatment plants and desalination facilities to meet growing demand.
Although highly fragmented, the sector benefits from greater water efficiency across households and industries, promoting sustainable use. As capital-intensive businesses, water utilities gain from lower interest rates, which reduce financing costs and support continued infrastructure investment.
Three Trends Shaping the Future of the Water Supply Industry
Consolidation in a Fragmented Industry: The U.S. water industry remains deeply fragmented, with over 50,000 community water systems and 14,000 wastewater treatment facilities. Many smaller providers operate under financial constraints that hinder infrastructure upgrades, leading to inefficiencies and wastage of potable water.
While consolidation through mergers and acquisitions has been slow, it is vital for improving service quality, reducing operating costs, and enabling larger-scale infrastructure investments. Increasingly, major players are acquiring smaller systems to modernize operations and extend their service reach.
Interest Rates Decline Support Long-Term Investment: Water utilities, which rely heavily on debt to finance infrastructure improvements and expansion, are well-positioned to benefit from the latest interest rate cuts. After raising the benchmark rate to 5.25%–5.50%, the Federal Reserve has now reduced it by 100 basis points to 4.25%–4.50%.
This decline lowers financing costs, giving utilities a favorable environment to pursue large-scale infrastructure projects. With additional rate reductions anticipated in the second half of 2025, capital servicing expenses are expected to fall further, enhancing the performance of these capital-intensive companies.
Aging Infrastructure Requires Investments: The U.S. water and wastewater infrastructure is deteriorating, with water main breaks occurring every few minutes, according to the American Society of Civil Engineers (ASCE). The Environmental Protection Agency estimates that $1.25 trillion in investments will be needed over the next 20 years to maintain and upgrade drinking water, wastewater and stormwater systems.
The Bipartisan Infrastructure Law has committed $50 billion toward improving these systems, especially in underserved communities. ASCE currently rates U.S. drinking water infrastructure at C- and wastewater systems at D+, underscoring the urgent need for upgrades. The regulated water utilities are making investments to upgrade and maintain infrastructure.
Zacks Industry Rank Indicates Bright Prospects
The Zacks Utility Water Supply industry is an 11-stock group within the broader Zacks Utilities sector. The industry currently carries a Zacks Industry Rank #89, which places it in the top 36% of more than 245 Zacks industries.
The group's Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates bullish prospects for the near term. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.
The industry's positioning in the top 50% of the Zacks-ranked industries is a result of a positive earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are optimistic about this group's earnings growth.
Before we present a few stocks that you may want to consider for your portfolio, let's take a look at the industry's recent stock market performance and valuation.
Water Supply Industry Lags Sector and S&P 500
The Zacks Utility Water Supply industry has underperformed the Zacks S&P 500 composite and its sector in the past 12 months. The industry has gained 5% compared with the Utility sector's rally of 9%. The Zacks S&P 500 composite has advanced 15.4% in the same time frame.
Industry Trading at a Discount to Sector & S&P 500
On the basis of the trailing 12-month enterprise value to EBITDA (EV/EBITDA), which is a commonly used multiple for valuing water utility stocks, the industry is currently trading at 10.55X compared with the S&P 500's 17.7X and the sector's trailing 12-month EV/EBITDA of 15.15X.
Over the past five years, the water supply industry has traded as high as 24.56X, as low as 9.06X and at the median of 16.26X.
California Water Service Group: The San Jose, CA-based company, along with its subsidiaries, provides water utility and other related services to customers in the United States. The company continues to expand operations through acquisitions and plans to invest $2.06 billion in the 2025-2027 time period to further strengthen its infrastructure, repair and upgrade aging assets.
Over the past 60 days, the Zacks Consensus Estimate for 2025 and 2026 earnings per share has increased by 3.02% and 1.58% respectively. The long-term (three to five years) earnings growth is currently pegged at 8.78%. The current dividend yield of the company is 2.57%, better than the S&P 500 yield of 1.5%. The company delivered a positive surprise of 54.35% in the last quarter.
Global Water Resources: This Phoenix, AZ-based company operates and manages 29 water, wastewater and recycled water systems in strategically located communities, principally in metropolitan Phoenix and Tucson, AZ. The company is recognized for its strong execution of Total Water Management (TWM), an integrated strategy for overseeing the entire water cycle. This approach involves operating water, wastewater, and recycled water utilities within the same region to optimize the use of recycled water.
Over the past 60 days, the Zacks Consensus Estimate for 2025 and 2026 earnings has remained the same. The long-term earnings growth rate for the company is currently pegged at 15%. GWRS' current dividend yield is 3.13%.
The York Water Co.: This YORK, PA-based company purifies and distributes drinking water. The company owns and manages three wastewater collection networks along with ten wastewater collection and treatment facilities. The company continues to expand operations through acquisitions and plans to invest $94.5 million in the 2025-2026 time period.
Over the past 60 days, the Zacks Consensus Estimate for 2025 earnings per share has moved up by 1.5%. YORW's current dividend yield is 2.81%. The company delivered an average surprise of 6.06% in the last quarter.
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Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Zacks Industry Outlook Highlights California Water Service, The York Water and Global Water Resources
For Immediate Release
Chicago, IL – August 29, 2025 – Today, Zacks Equity Research discusses California Water Service Group (CWT - Free Report) , The York Water Co. (YORW - Free Report) and Global Water Resources, Inc. (GWRS - Free Report) .
Industry: Water Utility
Link: https://www.zacks.com/commentary/2743692/3-stocks-to-watch-from-the-prospering-water-supply-industry
The companies under the Zacks Utility - Water Supply industry work around the clock to provide a reliable supply of clean drinking water and efficient sewer services to millions of people across the United States, essential resources for safeguarding public health and sanitation. Typically, water usage declines in the winter months as colder weather reduces outdoor consumption. Conversely, demand rises during the summer, driven by higher temperatures and increased outdoor activities.
The aging of pipelines is concerning, but water utilities continue with their upgrade and maintenance projects to minimize disruptions in operations. California Water Service Group, with its operations in California, strategic acquisitions and other organic efforts, is efficiently providing services to its customers. Other water utilities worth adding to your portfolio are The York Water Co. and Global Water Resources, Inc..
About the Utility-Water Supply Industry
The Zacks Utility - Water Supply industry consists of companies that provide drinking water and wastewater services to residential, commercial, industrial and military customers. Water utilities oversee a vast network of nearly 2.2 million miles of aging pipelines.
To ensure reliability and expand service, operators continually replace old infrastructure and invest in new pipeline systems. They also manage storage tanks, treatment plants and desalination facilities to meet growing demand.
Although highly fragmented, the sector benefits from greater water efficiency across households and industries, promoting sustainable use. As capital-intensive businesses, water utilities gain from lower interest rates, which reduce financing costs and support continued infrastructure investment.
Three Trends Shaping the Future of the Water Supply Industry
Consolidation in a Fragmented Industry: The U.S. water industry remains deeply fragmented, with over 50,000 community water systems and 14,000 wastewater treatment facilities. Many smaller providers operate under financial constraints that hinder infrastructure upgrades, leading to inefficiencies and wastage of potable water.
While consolidation through mergers and acquisitions has been slow, it is vital for improving service quality, reducing operating costs, and enabling larger-scale infrastructure investments. Increasingly, major players are acquiring smaller systems to modernize operations and extend their service reach.
Interest Rates Decline Support Long-Term Investment: Water utilities, which rely heavily on debt to finance infrastructure improvements and expansion, are well-positioned to benefit from the latest interest rate cuts. After raising the benchmark rate to 5.25%–5.50%, the Federal Reserve has now reduced it by 100 basis points to 4.25%–4.50%.
This decline lowers financing costs, giving utilities a favorable environment to pursue large-scale infrastructure projects. With additional rate reductions anticipated in the second half of 2025, capital servicing expenses are expected to fall further, enhancing the performance of these capital-intensive companies.
Aging Infrastructure Requires Investments: The U.S. water and wastewater infrastructure is deteriorating, with water main breaks occurring every few minutes, according to the American Society of Civil Engineers (ASCE). The Environmental Protection Agency estimates that $1.25 trillion in investments will be needed over the next 20 years to maintain and upgrade drinking water, wastewater and stormwater systems.
The Bipartisan Infrastructure Law has committed $50 billion toward improving these systems, especially in underserved communities. ASCE currently rates U.S. drinking water infrastructure at C- and wastewater systems at D+, underscoring the urgent need for upgrades. The regulated water utilities are making investments to upgrade and maintain infrastructure.
Zacks Industry Rank Indicates Bright Prospects
The Zacks Utility Water Supply industry is an 11-stock group within the broader Zacks Utilities sector. The industry currently carries a Zacks Industry Rank #89, which places it in the top 36% of more than 245 Zacks industries.
The group's Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates bullish prospects for the near term. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.
The industry's positioning in the top 50% of the Zacks-ranked industries is a result of a positive earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are optimistic about this group's earnings growth.
Before we present a few stocks that you may want to consider for your portfolio, let's take a look at the industry's recent stock market performance and valuation.
Water Supply Industry Lags Sector and S&P 500
The Zacks Utility Water Supply industry has underperformed the Zacks S&P 500 composite and its sector in the past 12 months. The industry has gained 5% compared with the Utility sector's rally of 9%. The Zacks S&P 500 composite has advanced 15.4% in the same time frame.
Industry Trading at a Discount to Sector & S&P 500
On the basis of the trailing 12-month enterprise value to EBITDA (EV/EBITDA), which is a commonly used multiple for valuing water utility stocks, the industry is currently trading at 10.55X compared with the S&P 500's 17.7X and the sector's trailing 12-month EV/EBITDA of 15.15X.
Over the past five years, the water supply industry has traded as high as 24.56X, as low as 9.06X and at the median of 16.26X.
3 Water Utility Industry Stocks to Buy Now
We have discussed three stocks from the Zacks Utility- Water Supply industry with strong growth potential, each currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
California Water Service Group: The San Jose, CA-based company, along with its subsidiaries, provides water utility and other related services to customers in the United States. The company continues to expand operations through acquisitions and plans to invest $2.06 billion in the 2025-2027 time period to further strengthen its infrastructure, repair and upgrade aging assets.
Over the past 60 days, the Zacks Consensus Estimate for 2025 and 2026 earnings per share has increased by 3.02% and 1.58% respectively. The long-term (three to five years) earnings growth is currently pegged at 8.78%. The current dividend yield of the company is 2.57%, better than the S&P 500 yield of 1.5%. The company delivered a positive surprise of 54.35% in the last quarter.
Global Water Resources: This Phoenix, AZ-based company operates and manages 29 water, wastewater and recycled water systems in strategically located communities, principally in metropolitan Phoenix and Tucson, AZ. The company is recognized for its strong execution of Total Water Management (TWM), an integrated strategy for overseeing the entire water cycle. This approach involves operating water, wastewater, and recycled water utilities within the same region to optimize the use of recycled water.
Over the past 60 days, the Zacks Consensus Estimate for 2025 and 2026 earnings has remained the same. The long-term earnings growth rate for the company is currently pegged at 15%. GWRS' current dividend yield is 3.13%.
The York Water Co.: This YORK, PA-based company purifies and distributes drinking water. The company owns and manages three wastewater collection networks along with ten wastewater collection and treatment facilities. The company continues to expand operations through acquisitions and plans to invest $94.5 million in the 2025-2026 time period.
Over the past 60 days, the Zacks Consensus Estimate for 2025 earnings per share has moved up by 1.5%. YORW's current dividend yield is 2.81%. The company delivered an average surprise of 6.06% in the last quarter.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.7% average gain per year. Amazingly, they soared with average gains of +48.4%, +50.2% and +56.7% per year.
Today you can access their live picks without cost or obligation.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.