Companhia De Saneamento Basico Do Estado De Sao Paulo (SBS, Financial), a regulated utilities company, has a market capitalization of $7.94 billion. As of July 22, 2023, the company's stock price stands at $11.61, reflecting a gain of 3.48% today, despite a slight loss of 0.64% over the past four weeks. The company's GF Score is 88 out of 100, indicating good outperformance potential. This article will delve into the components of the GF Score, providing a comprehensive analysis of SBS's financial strength, profitability, growth, GF value, and momentum ranks.
Financial Strength Analysis
SBS's Financial Strength rank is 5 out of 10. This rank is determined by three key factors: interest coverage (3.75), debt to revenue ratio (0.80), and Altman Z score (1.50). The company's moderate financial strength rank suggests a balanced debt burden and financial situation.
Profitability Rank Analysis
The company's Profitability Rank is 9 out of 10, indicating high profitability. This rank is based on the operating margin (21.32%), Piotroski F-Score (7), a negative trend in the operating margin over the past five years (-7.70%), and a consistency of profitability over the past decade. The high profitability rank suggests that SBS's business is likely to remain profitable.
Growth Rank Analysis
SBS's Growth Rank is 9 out of 10, reflecting strong growth in terms of revenue and profitability. The company's 5-year revenue growth rate is 7.80%, and the 3-year revenue growth rate is 7.00%. The 5-year EBITDA growth rate is 5.10%. The high growth rank indicates that SBS has consistently grown its business operations over the years.
GF Value Rank Analysis
The company's GF Value Rank is 3 out of 10. This rank is determined by the price-to-GF-Value ratio, a proprietary metric calculated based on historical multiples and an adjustment factor based on a company's past returns and growth and future estimates of the business' performance. The low GF Value rank suggests that SBS's stock may be overvalued.
Momentum Rank Analysis
SBS's Momentum Rank is 9 out of 10, indicating strong momentum. This rank is determined using the standardized momentum ratio and other momentum indicators. The high momentum rank suggests that SBS's stock price has been performing well recently.
Comparison with Competitors
When compared to its competitors in the same industry, SBS performs well. CIA Catarinense de Aguas e Saneamento - CASAN (BSP:CASN3, Financial) has a GF Score of 78, Compania de Saneamento de Minas Gerais - COPASA MG (BSP:CSMG3, Financial) has a GF Score of 73, and CIA Saneamento Do Parana-SANEPAR (BSP:SAPR3, Financial) has a GF Score of 93. SBS's GF Score of 88 places it competitively among these companies.
Conclusion
In conclusion, SBS's high GF Score of 88 suggests good outperformance potential. The company has strong profitability and growth ranks, indicating a profitable and growing business. However, its moderate financial strength rank and low GF Value rank suggest a balanced financial situation and potential overvaluation. Despite these, SBS's strong momentum rank indicates a positive trend in its stock price. Therefore, SBS presents a compelling investment opportunity based on its GF Score analysis.
