Consolidated Water Co. Ltd. (NASDAQ: CWCO)

Sector: Utilities Industry: Utilities - Regulated Water CIK: 0000928340
Market Cap 541.49 Mn
P/B 4.21
P/E 88.40
P/S 10.18
ROIC (Qtr) 6.56
Div Yield % 1.19
Rev 1y % (Qtr) 5.18
Total Debt (Qtr) 3.22 Mn
Debt/Equity (Qtr) 0.01
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About

Consolidated Water Co. Ltd., referred to as CWCO, is a prominent player in the water solutions industry, offering a variety of services and products to customers in the Cayman Islands, The Bahamas, the United States, and the British Virgin Islands. The company's operations span across retail water operations, bulk water operations, services operations, and manufacturing operations, demonstrating its comprehensive approach to water solutions. CWCO's main business activities revolve around the production and supply of potable water. The company utilizes...

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Investment thesis

Bull case

  • Strong operating cash flow of 35.19M provides robust 10.92x coverage of total debt 3.22M, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 123.55M provide 169.36x coverage of short-term debt 729532, demonstrating strong liquidity position and minimal refinancing risk.
  • Strong tangible asset base of 242.17M provides 75.17x coverage of total debt 3.22M, indicating robust asset backing and low credit risk.
  • Operating cash flow of 35.19M provides exceptional 6151.16x coverage of interest expenses 5721, showing strong debt service capability.
  • Operating cash flow of 35.19M provides strong 21.14x coverage of stock compensation 1.66M, indicating sustainable incentive practices.

Bear case

  • Operating cash flow of 35.19M barely covers its investment activities of (9.04M), with a coverage ratio of -3.89, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 35.19M provides thin coverage of dividend payments of (7.48M) with a -4.70 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 123.55M provide limited coverage of acquisition spending of (50000), which is -2471.09x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • High receivables of 29M relative to inventory of 10.16M (2.85 ratio) suggests aggressive credit terms or collection difficulties, potentially masking revenue quality issues.
  • Free cash flow of 26.10M represents just -179.22x of debt issuance (145626), suggesting concerning reliance on leverage rather than internal cash generation for growth.

Peer comparison

Companies in the Utilities - Regulated Water
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 AWK American Water Works Company, Inc. 24.13 Bn 37.82 6.54 15.37 Bn
2 WTRG Essential Utilities, Inc. 6.86 Bn 45.52 9.97 7.98 Bn
3 AWR American States Water Co 2.79 Bn 47.69 6.18 0.92 Bn
4 CWT California Water Service Group 2.22 Bn 43.86 3.64 1.52 Bn
5 HTO H2O America 1.79 Bn 19.00 2.39 1.90 Bn
6 MSEX Middlesex Water Co 0.99 Bn 22.76 5.03 0.41 Bn
7 CWCO Consolidated Water Co. Ltd. 0.54 Bn 88.40 10.18 0.00 Bn
8 YORW York Water Co 0.47 Bn 23.81 7.76 0.23 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.98 1.15
EV to Cash from Ops. EV/CFO 33.08 23.08
EV to Debt EV to Debt 157.77 18.00
EV to EBIT EV/EBIT 68.88 23.85
EV to EBITDA EV/EBITDA 43.83 16.61
EV to Free Cash Flow [EV/FCF] EV/FCF 102.59 -20.94
EV to Market Cap EV to Market Cap 0.94 1.32
EV to Revenue EV/Rev 9.56 9.58
Price to Book Value [P/B] P/B 4.21 4.93
Price to Earnings [P/E] P/E 88.40 38.23
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 2.26 0.89
Dividend Payout Ratio % Div Payout % (Qtr) 44.30 56.90
Dividend per Basic Share Div per Share (Qtr) 0.50 1.13
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 30.51 -14.77
Interest Coverage Int. cover (Qtr) 3,279.04 279.41
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -94.64 -66.90
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 17.82 15.05
Dividend Growth (1y) % Div 1y % (Qtr) 26.58 6.56
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -54.05 -2.63
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -34.58 0.44
EBIT Growth (1y) % EBIT 1y % (Qtr) -54.60 -4.60
EBT Growth (1y) % EBT 1y % (Qtr) -54.46 -5.63
EPS Growth (1y) % EPS 1y % (Qtr) -54.31 -4.34
FCF Growth (1y) % FCF 1y % (Qtr) -18.85 -313.21
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -17.45 349.72
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.51 0.18
Cash Payout Ratio Cash Payout (Qtr) 0.17 0.04
Cash Ratio Cash Ratio (Qtr) 4.38 0.68
Current Ratio Curr Ratio (Qtr) 6.03 1.38
Debt to Equity Ratio Debt/Equity (Qtr) 0.01 1.08
Interest Cover Ratio Int Coverage (Qtr) 3,279.04 279.41
Times Interest Earned Times Interest Earned (Qtr) 3,279.04 279.41
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 20.00 31.76
EBIT Margin % EBIT Margin % (Qtr) 14.34 17.86
EBT Margin % EBT Margin % (Qtr) 14.33 6.26
Gross Margin % Gross Margin % (Qtr) 35.60 53.31
Net Profit Margin % Net Margin % (Qtr) 12.90 2.23