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California Water Service Group (CWT)


California Water Service Group (NYSE:CWT) was founded in 1926 and is headquartered in San Jose, California. It is the parent company of several water utility companies. The Company provides regulated and non-regulated water utility services to customers in California, New Mexico, and Washington.

Stock Snapshot:

The Company’s stock closed at USD 18.57 as of 9th Oct’2012, with a total market capitalization of USD 780.67 million. The stock has witnessed an average volume of 176,883 for the past three years. Over the last year, the stock has traded in a narrow range of USD18.46 to USD 18.69. The stock has been trading at a P/E ratio of 21.16, a P/S ratio of 1.46, and a P/B ratio of 1.72.

Competitor Snapshot:

United Utilities Group PLC (LON:UU), through its subsidiaries, provides water and wastewater services to people and businesses in the England and Wales. The company’s stock closed at GBP 729 as on 9th Oct’2012 with a P/E ratio of 1,574, a P/S ratio of 312.6 and a P/B ratio of 277.24.

Financial Highlights:

Operating Revenue:

The operating revenue of the Company increased from USD 229.5 million in 6MFY11, to USD 30.8 million representing a YoY increase of 13%. The major contributors to improved revenue performance were increases in usage and rates.

Operating Expenses:

For 6MFY12, operating expenses increased by 17% YoY, and were recorded at USD 234.1 million. The main reason for the increase in operating expenses was a rise of 20% in water production expense, which is the largest component of total operating expenses (representing 39% of total operating expenses in 6MFY12).

Net Income:

For 6MFY12, the diluted net income per share was recorded at USD 0.34 per share, as compared to USD 0.36 per share for 6MFY11. The decrease was mainly due to a non-recurring income tax adjustment, recorded during the first quarter of 2011, which reduced income taxes by $1.6 million.

Financial Position:

As of 30th June 2012, the Company had USD 20.8 million in cash; representing a cash value per share of USD 0.5 . The Company also had total debt amounting to USD 574.42 million, resulting in a debt to equity ratio of 127.75. The book value per share stood at USD 10.77 per share.

Factors to watch out for:

* Double Digit growth in Revenues!

* Company’s product is a utility!

* 5 year average dividend yield at 3.1% and a payout ratio of 71%