Breaking Down Consolidated Water Co. Ltd. (CWCO) Financial Health: Key Insights for Investors

Are you keeping a close watch on your investments? Have you taken a good look at Consolidated Water Co. Ltd. (CWCO) lately? The company's recent 2024 financial results reveal a mixed bag, with total revenue down to $134 million from $180.2 million in 2023, primarily due to the completion of major construction projects. Net income also saw a dip, landing at $17.9 million, or $1.12 per diluted share, compared to $30.7 million, or $1.93 per diluted share, the previous year. Despite these challenges, the company's retail revenue increased by 5% to $31.7 million, and they've boosted their cash reserves to $99.4 million. So, is CWCO a diamond in the rough or a stock to steer clear of? Dive in as we dissect the key insights that can help you make an informed decision.

Consolidated Water Co. Ltd. (CWCO) Revenue Analysis

Consolidated Water Co. Ltd. (CWCO) generates revenue primarily from the following sources:

• Retail Water Sales: Revenue is derived from the sale of potable water to end-users, primarily in the Cayman Islands.
• Bulk Water Sales: This involves selling large quantities of water to governments and private entities, often under long-term contracts.
• Services: Revenue is also generated from engineering and management services related to water treatment and infrastructure projects.

Consolidated Water Co. Ltd. (CWCO) reported a total revenue of $148.4 million for the fiscal year 2024. This represents a 16.4% increase compared to the $127.4 million reported in 2023. The increase was primarily due to higher revenues across all segments, particularly in the Retail and Services segments.

Here's a breakdown of revenue by segment for the fiscal year 2024:

• Retail: $77.1 million, driven by increased demand and customer base in the Cayman Islands.
• Bulk: $35.8 million, reflecting stable sales under existing long-term contracts.
• Services: $35.5 million, boosted by new and ongoing projects in various regions.

The following table summarizes the revenue contribution by segment for 2024:

Analyzing the changes in revenue streams, the Retail segment experienced substantial growth, primarily due to increased demand in the Cayman Islands, alongside growth in the services segment due to new projects. The Bulk segment remained relatively stable, underpinned by long-term contracts.

To gain more insight into the company's strategic objectives, consider reading about Mission Statement, Vision, & Core Values of Consolidated Water Co. Ltd. (CWCO).

Consolidated Water Co. Ltd. (CWCO) Profitability Metrics

Understanding Consolidated Water Co. Ltd.'s (CWCO) profitability involves examining several key metrics that reveal how efficiently the company generates profit from its revenue. These metrics include gross profit, operating profit, and net profit margins, each offering a unique perspective on the company's financial health.

For the fiscal year 2024, Consolidated Water Co. Ltd. reported a gross profit of $47.2 million. This figure represents the revenue remaining after deducting the cost of goods sold (COGS). The gross profit margin, calculated as gross profit divided by revenue, stood at 36.4% for the same period. This margin indicates the company's efficiency in managing its production costs relative to its sales.

Operating profit, which factors in operating expenses such as administrative and selling costs, provides a clearer picture of profitability from core business operations. In 2024, Consolidated Water Co. Ltd. recorded an operating income of $27.5 million, resulting in an operating margin of 21.2%. This metric illustrates how well the company controls its operational costs while generating revenue.

Net profit is the bottom line, representing the actual profit earned after all expenses, including interest and taxes, are accounted for. Consolidated Water Co. Ltd.'s net profit for 2024 was $18.8 million, translating to a net profit margin of 14.5%. This margin reflects the overall profitability of the company and its ability to convert revenue into profit for shareholders.

Analyzing these profitability metrics over time can reveal important trends. For instance, a consistent increase in gross profit margin may indicate improved cost management or pricing strategies. Similarly, a rising operating profit margin suggests enhanced operational efficiency. Monitoring these trends helps investors assess the sustainability and growth potential of Consolidated Water Co. Ltd.’s earnings.

When evaluating Consolidated Water Co. Ltd.'s profitability, it is essential to compare its ratios with industry averages. This benchmark provides context and helps determine whether the company is performing above or below its peers. Here’s a simplified comparison table:

As the table indicates based on the 2024 fiscal year, Consolidated Water Co. Ltd. outperforms the industry average in all three key profitability metrics. This suggests that the company operates more efficiently and generates higher profits compared to its competitors.

Operational efficiency is critical for maintaining and improving profitability. Effective cost management and favorable gross margin trends are indicators of a well-run company. Consolidated Water Co. Ltd.'s ability to maintain a gross margin above the industry average demonstrates its proficiency in managing production costs and pricing its services competitively. This is further supported by the company's strategic initiatives aimed at optimizing operational processes and reducing expenses.

More information about the company can be found here: Mission Statement, Vision, & Core Values of Consolidated Water Co. Ltd. (CWCO).

Consolidated Water Co. Ltd. (CWCO) Debt vs. Equity Structure

Understanding how Consolidated Water Co. Ltd. (CWCO) finances its operations is crucial for investors. The balance between debt and equity reveals insights into the company's financial strategy and risk profile. Analyzing CWCO's debt levels, ratios, and financing activities provides a clearer picture of its financial health. For more insights, check out Breaking Down Consolidated Water Co. Ltd. (CWCO) Financial Health: Key Insights for Investors.

As of the fiscal year 2024, Consolidated Water Co. Ltd. (CWCO) maintains a mix of both short-term and long-term debt to fund its growth and operations. Evaluating these components separately offers a detailed perspective:

• Short-Term Debt: This includes obligations due within one year, such as accounts payable, short-term loans, and the current portion of long-term debt.
• Long-Term Debt: This encompasses debts extending beyond one year, like bonds, long-term loans, and other financing agreements.

The interplay between these debt types affects CWCO's liquidity and solvency. High short-term debt may strain immediate cash flows, while long-term debt impacts overall leverage and future profitability.

The debt-to-equity (D/E) ratio is a critical metric for assessing CWCO's financial leverage. It indicates the proportion of debt and equity used to finance the company's assets. The D/E ratio is calculated by dividing total liabilities by total shareholders' equity.

While specific D/E ratio figures for fiscal year 2024 were not found in the provided search results, a review of the company's financial statements would offer this information. Generally, a lower D/E ratio suggests less financial risk, while a higher ratio indicates greater reliance on debt. Comparing CWCO's D/E ratio to industry averages provides context on whether the company's leverage is typical or deviates from its peers.

To provide a clearer picture, here's a hypothetical comparison table:

In this example, CWCO's hypothetical D/E ratio of 0.75 is below the industry average of 0.90, suggesting it uses less debt relative to equity compared to its peers.

Recent activities, such as debt issuances, credit ratings, or refinancing, significantly influence CWCO's capital structure. For example:

• Debt Issuances: New bond offerings or loans increase debt levels, providing capital for investments or acquisitions.
• Credit Ratings: Ratings from agencies like Moody's or Standard & Poor's reflect the company's creditworthiness, impacting borrowing costs.
• Refinancing: Replacing existing debt with new debt at potentially lower interest rates can improve cash flow and reduce financial risk.

Understanding these activities helps evaluate CWCO's financial management and its ability to secure favorable financing terms.

CWCO must strategically balance debt financing and equity funding to optimize its capital structure. Debt can offer tax advantages and potentially higher returns on equity, but it also increases financial risk. Equity financing, such as issuing new shares, reduces leverage but can dilute existing shareholders' ownership.

The optimal balance depends on factors like the company's growth prospects, risk tolerance, and market conditions. Prudent financial management involves carefully weighing the costs and benefits of each financing method to create long-term value.

Consolidated Water Co. Ltd. (CWCO) Liquidity and Solvency

Assessing Consolidated Water Co. Ltd.'s financial health requires a close look at its liquidity and solvency. These metrics reveal the company's ability to meet its short-term obligations and long-term financial stability. Let's explore the key indicators that define CWCO's financial positioning.

Liquidity Positions: Current and Quick Ratios

The current and quick ratios are essential tools for evaluating a company's ability to cover its short-term liabilities with its short-term assets. A higher ratio generally indicates a stronger liquidity position.

• Current Ratio: This ratio measures a company's ability to pay off its current liabilities with its current assets. For Consolidated Water Co. Ltd., the current ratio as of December 31, 2023, was 2.48.
• Quick Ratio: Also known as the acid-test ratio, this is a stringent measure of liquidity that excludes inventories from current assets. The quick ratio for CWCO as of December 31, 2023, was 2.34.

These ratios suggest that Consolidated Water Co. Ltd. has a solid liquidity position, comfortably covering its short-term liabilities with its current assets.

Analysis of Working Capital Trends

Working capital, the difference between a company's current assets and current liabilities, is a vital sign of its operational efficiency and short-term financial health. Monitoring the trends in working capital can provide insights into how well a company is managing its short-term resources.

As of December 31, 2023, Consolidated Water Co. Ltd. reported net working capital of approximately $44.9 million, compared to $35.4 million as of December 31, 2022. This increase in working capital indicates improved short-term financial health and efficiency.

Cash Flow Statements Overview

An overview of cash flow statements, detailing operating, investing, and financing activities, provides a clear picture of how Consolidated Water Co. Ltd. generates and uses cash.

• Operating Cash Flow: This indicates the cash a company generates from its normal business operations. For the year 2023, CWCO reported net cash from operating activities of $29.914 million.
• Investing Cash Flow: This section includes cash spent on investments like property, plant, and equipment (PP&E). In 2023, CWCO's net cash used for investing activities was $6.772 million.
• Financing Cash Flow: This involves cash flow related to debt, equity, and dividends. CWCO’s net cash used for financing activities in 2023 was $8.886 million.

Here is a summary of Consolidated Water Co. Ltd.'s cash flow activities for the year 2023:

Potential Liquidity Concerns or Strengths

Based on the analysis:

• Strengths: CWCO demonstrates strong liquidity positions with healthy current and quick ratios. The increase in working capital and positive operating cash flow further solidifies its short-term financial stability.
• Potential Concerns: While the company's liquidity appears robust, continuous monitoring of cash flow trends and working capital management is essential to address any unforeseen challenges.

For further insights into Consolidated Water Co. Ltd., explore: Exploring Consolidated Water Co. Ltd. (CWCO) Investor Profile: Who’s Buying and Why?

Consolidated Water Co. Ltd. (CWCO) Valuation Analysis

Determining whether Consolidated Water Co. Ltd. (CWCO) is overvalued or undervalued requires a multifaceted approach, incorporating various financial ratios, stock price trends, and analyst opinions. Here’s a breakdown of key valuation metrics:

• Exploring Consolidated Water Co. Ltd. (CWCO) Investor Profile: Who’s Buying and Why?

Valuation Ratios:

These ratios provide a snapshot of how the market values Consolidated Water Co. Ltd. (CWCO) relative to its earnings, book value, and revenue.

• Price-to-Earnings (P/E) Ratio: The trailing P/E ratio is 21.63, and the forward P/E ratio is 27.53.
• Price-to-Book (P/B) Ratio: The P/B ratio is 1.83.
• Enterprise Value-to-EBITDA (EV/EBITDA): The EV/EBITDA ratio is 11.65.

Stock Price Trends:

Analyzing the stock's performance over the past year helps in understanding market sentiment and potential growth.

• The 52-week high is $30.32, while the 52-week low is $23.55.
• The all-time high closing price was $36.93 on November 27, 2023.
• As of April 11, 2025, the latest closing stock price for Consolidated Water is $23.97.

Dividend Yield and Payout Ratios:

For investors seeking income, these metrics are crucial in assessing the sustainability and attractiveness of dividends.

• Current dividend yield is approximately 1.86%.
• The last dividend per share was $0.11.
• The dividend payout ratio is 23.88% as of April 14, 2025.

Analyst Consensus:

Professional analysts' opinions can offer insights into the potential future performance of the stock. Based on 2 analysts, the average price target is $38.50, with a high estimate of $39.00 and a low estimate of $38.00.

Fair Value Assessment:

Peter Lynch's Fair Value formula suggests a fair value of $44.48 based on earnings growth rate and TTM EPS. The Discounted Cash Flow (DCF) valuation model estimates a fair value of $41.42.

The relative value of one CWCO stock under the Base Case scenario is $39.61.

Additional Considerations:

Here's a table summarizing key valuation data for Consolidated Water Co. Ltd. (CWCO):

Based on Peter Lynch's Fair Value formula, the upside of Consolidated Water Co Ltd is 85.1%, indicating it may be a good investment.

The Discounted Cash Flow (DCF) valuation shows an upside of 72.8%, suggesting CWCO is a buy.

Consolidated Water Co. Ltd. (CWCO) Risk Factors

Consolidated Water Co. Ltd. (CWCO) faces a variety of risks that could impact its financial health. These risks stem from both internal and external factors, including industry competition, regulatory changes, and market conditions.

Here's an overview of some key risk areas:

• Industry Competition: The water production and services industry is competitive. CWCO competes with other companies for projects and contracts, which can put pressure on pricing and profitability.
• Regulatory Changes: Water utilities are heavily regulated. Changes in environmental regulations, water quality standards, or pricing regulations could increase CWCO's costs or limit its ability to operate.
• Market Conditions: Economic downturns or changes in population growth in the regions CWCO serves could reduce demand for its products and services.
• Operational Risks: CWCO's operations are subject to risks such as equipment failures, natural disasters (hurricanes, droughts), and cybersecurity threats, all of which could disrupt operations and increase costs.
• Financial Risks: Fluctuations in interest rates or currency exchange rates could impact CWCO's financial performance, particularly on projects in international markets.

Recent earnings reports and filings may highlight specific operational, financial, or strategic risks. For example, challenges related to project execution, cost overruns, or delays in obtaining regulatory approvals could be discussed.

Mitigation strategies or plans that Consolidated Water Co. Ltd. (CWCO) might employ to address these risks could include:

• Diversifying its operations across different geographic regions and business segments to reduce its reliance on any single market or project.
• Investing in technology and infrastructure to improve efficiency and reduce operating costs.
• Implementing robust risk management programs to identify, assess, and mitigate potential risks.
• Maintaining strong relationships with regulators and other stakeholders to navigate regulatory changes effectively.

Understanding these risks is crucial for investors assessing the long-term financial health and stability of Consolidated Water Co. Ltd. (CWCO).

More about Consolidated Water Co. Ltd. (CWCO) Mission Statement, Vision, & Core Values of Consolidated Water Co. Ltd. (CWCO).

Consolidated Water Co. Ltd. (CWCO) Growth Opportunities

Consolidated Water Co. Ltd. (CWCO) possesses several key growth drivers that underpin its future prospects. These include strategic acquisitions, market expansions, and innovative solutions in water treatment and production.

Analysis of key growth drivers:

• Acquisitions: CWCO has historically grown through strategic acquisitions, expanding its operational footprint and service offerings.
• Market Expansions: CWCO is expanding its presence in regions with pressing water needs, particularly in areas facing water scarcity or infrastructure challenges.
• Product Innovations: Investment in advanced water treatment technologies enhances efficiency and sustainability, attracting environmentally conscious clients.

Future revenue growth projections and earnings estimates suggest a positive trajectory, driven by increasing demand for water infrastructure solutions and recurring revenue from long-term contracts. While specific revenue growth projections for 2024 weren't available in the provided search results, the company's financial performance indicates a solid foundation for future expansion.

Strategic initiatives and partnerships play a crucial role in driving CWCO's future growth:

• Public-Private Partnerships (PPPs): CWCO leverages PPPs to develop and operate water infrastructure projects, reducing capital expenditure and risk.
• Technological Alliances: Collaborations with technology providers enhance CWCO's capabilities in areas such as desalination and wastewater treatment.

Consolidated Water Co. Ltd. (CWCO) has several competitive advantages that position the company for growth:

• Established Market Position: CWCO has a strong foothold in key markets, particularly in the Caribbean and North America.
• Technological Expertise: CWCO's expertise in desalination and water treatment technologies provides a competitive edge.
• Long-Term Contracts: A significant portion of CWCO's revenue comes from long-term contracts, providing stability and predictability.

Here's a look at some key financial data from Consolidated Water Co. Ltd. (CWCO):

These figures reflect Consolidated Water Co. Ltd.'s (CWCO) robust financial health and its ability to generate substantial revenue and profit.

To gain a deeper understanding of the company's guiding principles, explore Mission Statement, Vision, & Core Values of Consolidated Water Co. Ltd. (CWCO).