Global Water Resources Faces Downgrade from StockNews.com: What Does This Mean for the Utilities Provider?
On March 12th, stock analysts at StockNews.com released a research note that downgraded Global Water Resources (NASDAQ:GWRS) from a “buy” rating to a “hold”. This news has raised concerns among investors about the future prospects of this utilities provider and what it means for the company going forward.
To fully understand the implications of this downgrade, it is important to first consider Global Water Resources’ recent performance. On March 8th, the company reported quarterly earnings data that beat analysts’ estimates, with $0.04 earnings per share compared to expected $0.03. However, the firm’s revenue for the same period was only in line with expectations at $11.10 million.
Global Water Resources operates and manages water, wastewater, and recycled water utilities across several communities in Phoenix Arizona. Additionally, it distributes recycled water through a separate pipeline system throughout its service areas. Founded in 2003 by Trevor T Hill and William S Levine, GWRS has built a reputation as an effective player within its industry.
Despite this strong operating history and the recent earnings report showing a positive trend for Global Water Resources, there are some concerns regarding its future growth prospects that may have led to StockNews.com’s downgrade. One of these concerns could be related to the company’s return on equity of just over 13%. Although profitable in its operations, more efficient use of equity could lead to better overall returns for investors.
Furthermore, there has been uncertainty surrounding how Global Water Resources will continue expanding into new markets while balancing costs within their existing operations. The potentially high capital requirements necessary to fund expansion projects may lead investors to be wary of committing additional resources toward GWRS holdings at present time.
With all this information considered along with the impact of pandemic-driven changes on economic activity globsally as well as locally where Global Water Resources operates, it is no wonder that analysts are keeping a close eye on the future performance of the company.
In conclusion, while this downgrade may be disappointing to GWRS shareholders in the short term, it could also serve as a necessary wake-up call for Global Water Resources and its management team. The firm must address concerns regarding growth strategy and expenditure before it will be able to return to long-term profitability and attractiveness towards potential investors. It remains to be seen whether or not they will make these necessary adjustments in time for 2021.
Global Water Resources Downgraded by TheStreet, but Director and Institutional Investors Show Interest
Arizona-based Global Water Resources, Inc, which manages and operates water utilities, has seen its rating downgraded by TheStreet from a “b-” to a “c+” in a report last April. The firm’s quick ratio of 0.51 and current ratio of 0.51, combined with a debt-to-equity ratio of 2.42 did not meet expectations. Despite this, director Andrew M Cohn purchased over 2,000 shares of the company’s stock and now owns more than two million shares in total. Institutional investors have also shown interest in Global Water Resources recently, with companies including Deutsche Bank AG increasing their holdings by 59% during Q1 and BNP Paribas Arbitrage SA acquiring an additional 1,803 shares in Q2. The firm opened on Friday at $11.45 per share with market capitalisation of $273.31m; it has a PE ratio of 38.17 and beta of 0.73.
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