Breaking Down The York Water Company (YORW) Financial Health: Key Insights for Investors

You're looking at The York Water Company (YORW), and you're wondering if this classic utility stock is still the safe harbor it used to be, especially with inflation and rising interest rates complicating the picture. Honestly, the 2025 nine-month financials show a mixed bag that demands a closer look: operating revenues are up to $58.016 million, driven by customer growth and infrastructure charges (DSIC), but net income for the same period actually dipped slightly to $14.891 million due to higher operating and interest expenses. Still, the company continues to execute on its core mandate, investing $37.1 million year-to-date in capital projects like main extensions, plus they just declared their quarterly dividend of $0.2192 per share, extending their defintely impressive streak of increases to 28 years. So, the question isn't just about the revenue miss versus the EPS beat of $0.43 in Q3; it's about mapping those rising costs against the long-term, regulated stability of a water utility. Let's break down what this means for your portfolio right now.

Revenue Analysis

You're looking at The York Water Company (YORW), and the first thing to understand is that its revenue engine is simple and reliable. It's a regulated utility, so revenue isn't subject to the wild swings of a tech stock. You see steady growth driven by two main factors: an expanding customer base and a regulatory mechanism designed to fund infrastructure upgrades.

For the first nine months of the 2025 fiscal year, The York Water Company (YORW) reported total operating revenues of $58.016 million. This represents a solid year-over-year increase of $1.923 million compared to the same period in 2024. That's a defintely reliable trend in the utility space.

Primary Revenue Streams and Drivers

The company's revenue is fundamentally tied to its core services: water and wastewater utility operations in south-central Pennsylvania. The key to its growth isn't just selling more water, but a specific charge allowed by the state regulator.

• Customer Base Growth: New connections from residential and commercial development provide a foundational, recurring revenue lift.
• Distribution System Improvement Charge (DSIC): This is a crucial financial mechanism. The DSIC is a Pennsylvania Public Utility Commission-allowed charge that water utilities collect from customers specifically to fund the replacement of aging infrastructure. This charge provides a predictable, regulated revenue stream tied directly to necessary capital spending.

Segment Contribution: Where the Money Comes From

The majority of The York Water Company's (YORW) revenue comes from its water utility service, with residential customers being the largest segment. Here's the quick math for the first nine months of 2025, which shows you the core of their business:

You can see that over half of the revenue comes from residential customers. This makes the company's cash flow highly stable, but also sensitive to regional population growth and the state's regulatory environment.

Near-Term Changes and Opportunities

The biggest near-term opportunity is the rate case filed in May 2025, which seeks a 28.9% increase in water rates and a 44.5% increase in wastewater rates. A decision is expected in March 2026. If approved, this will significantly boost future revenue and profitability, but it also introduces regulatory risk until the decision is final.

The company is also investing heavily, which is an opportunity for future rate base growth. They invested $37.1 million in capital projects through the first nine months of 2025 and estimate an additional $10.0 million investment for the rest of the year. This continuous investment in infrastructure is what allows them to justify future rate increases and maintain service quality. For more on the long-term vision, you should review their Mission Statement, Vision, & Core Values of The York Water Company (YORW).

Profitability Metrics

You're looking for a clear picture of The York Water Company (YORW)'s financial engine, and the 2025 numbers show a profitable, but pressured, utility. The direct takeaway is this: The York Water Company is significantly more profitable than its industry peers on a net basis, but rising costs are squeezing its operational efficiency, causing a dip in its net margin for the first nine months of 2025.

For the nine months ended September 30, 2025, The York Water Company reported operating revenues of $58.016 million. Despite this revenue growth-driven by customer expansion and its Distribution System Improvement Charge (DSIC), which is a regulatory mechanism to recover infrastructure costs-net income actually decreased by $292,000 compared to the same period in 2024. This is a classic utility challenge: revenue is regulated, but expenses are not.

Here's the quick math on the key profitability margins for the first nine months of 2025, using the reported Net Income of $14.891 million:

• Net Profit Margin (9M 2025): 25.67%
• Operating Profit Margin (Q3 2025): 38.87% (Based on $7.914 million operating income on $20.361 million revenue)

The gross profit margin is less relevant for a regulated utility like this, as their cost of goods sold is minimal. We focus instead on the Operating Margin, which tells you how well they manage all their non-financing costs.

Trends in Profitability and Operational Efficiency

The trend is the critical factor. The York Water Company's net profit margin for the first nine months of 2025 was 25.67%. This is a drop from the approximately 27.07% net margin achieved in the same period of 2024. This is defintely a signal to watch. The primary culprits are clear: higher operation and maintenance expenses, increased depreciation on their substantial infrastructure investments, and higher interest on debt.

To be fair, the company is investing heavily in its future. They invested $37.1 million in capital projects during the first nine months of 2025, with an estimated additional $10.0 million planned by year-end. This spending is necessary for a utility, but it hits the income statement through depreciation and interest expense, which is why the net income is decreasing even as revenue rises. It's an investment in long-term stability and growth, but it hurts the near-term bottom line.

Industry Comparison and Actionable Insight

The York Water Company's profitability ratios are excellent compared to the broader Water Supply industry average. While the industry median for 2024 saw a Net Profit Margin of 17.9% and an Operating Margin of 26.8%, The York Water Company's 25.67% Net Margin and 38.87% Q3 Operating Margin are substantially higher. This suggests a very efficient operation, or perhaps a favorable regulatory environment in Pennsylvania that allows for better pricing power.

The company is actively trying to address the pressure on its margins. They filed a significant rate increase request in May 2025, seeking a 28.9% increase in water rates and a 44.5% increase in wastewater rates. A decision is expected by March 1, 2026. This is the clear action they are taking to restore their margins and fund their infrastructure needs. Your investment decision hinges on the outcome of this regulatory process.

Here is a quick comparison of the key ratios:

Action for you: Track the Pennsylvania Public Utility Commission's decision on the rate case. That decision will defintely dictate the company's profitability trajectory for the next few years. For more on the company's long-term vision that drives these investments, you can review their Mission Statement, Vision, & Core Values of The York Water Company (YORW).

Debt vs. Equity Structure

The York Water Company (YORW), as a regulated utility, relies heavily on a predictable capital structure to fund its continuous infrastructure needs. For you as an investor, the key takeaway is that The York Water Company's financial leverage (debt-to-equity) is healthy and actually lower than the industry average, which is a sign of relative stability.

As of the most recent reporting period in late 2025, the company's debt-to-equity (D/E) ratio stood at approximately 0.96, or 95.7%. This means for every dollar of shareholder equity, the company uses roughly 96 cents of debt financing. Honestly, for a capital-intensive utility, that's a solid, conservative number. The average D/E ratio for the broader Water Utilities industry is around 1.514, so The York Water Company is running with significantly less leverage than its peers.

Here's the quick math on their financing structure, based on Q3 2025 figures:

The company's total debt is split between long-term obligations and near-term working capital needs. Long-term debt was reported at about $226.99 million as of September 2025. Short-term debt, specifically borrowings under their revolving line of credit, was $37.43 million at that same time. You can see that long-term financing drives the structure, which is typical for funding multi-decade infrastructure projects.

The York Water Company manages its capital needs through a balanced approach, using both debt and equity. Debt, especially in a regulated environment, offers a lower cost of capital, which regulators often allow to be passed on to customers (the allowance for funds used during construction, or AFUDC, is a factor here). But too much debt raises interest expense, which has been a noticeable trend, with interest expense increasing in Q3 2025 due to more debt outstanding.

Recent activity shows a move to secure near-term liquidity, which is a clear action item for any trend-aware management team in a higher-rate environment. The company renewed its $50 million committed line of credit, extending the maturity to September 2027. This renewal provides a crucial buffer for capital expenditures, estimated to be an additional $36.7 million in 2025 alone for projects like main extensions and wastewater treatment plant construction. This continuous investment is why you need to understand Mission Statement, Vision, & Core Values of The York Water Company (YORW)-it's a growth story tied to infrastructure. They need to keep funding that growth.

• Maintain a D/E ratio below the industry average of 1.514.
• Fund long-term assets with long-term debt ($226.99 million).
• Use the renewed $50 million credit line for flexible, near-term capital needs.

What this estimate hides is the impact of rising interest rates on that new debt and the existing variable-rate debt, plus the pending decision on their May 2025 rate request, which is defintely a key action item to watch. If the rate case is approved, it will help offset the rising cost of debt financing.

Liquidity and Solvency

You need to know if The York Water Company (YORW) can cover its near-term obligations while funding its massive infrastructure needs. The short answer is yes, its liquidity is stable, but it relies heavily on external financing to fund its growth, which is standard for a capital-intensive utility.

The company's ability to meet its immediate short-term debts-its liquidity position-is acceptable, though not stellar, which is defintely typical for the water utility sector.

Current and Quick Ratios: A Closer Look

The two core metrics for liquidity are the Current Ratio and the Quick Ratio (or acid-test ratio). The Current Ratio for The York Water Company (YORW) stood at 1.15 in the most recent quarter (MRQ) of 2025. This means the company holds $1.15 in current assets for every dollar of current liabilities.

• Current Ratio: 1.15 (Acceptable, but lean).
• Quick Ratio: 0.81 (Below 1.0, but expected).

The Quick Ratio, which strips out less-liquid assets like inventory, sits at 0.81. This sub-1.0 figure isn't a red flag here because a water utility holds very little salable inventory. Their current assets are mostly stable receivables from customers, not goods waiting to be sold. Still, it shows a tight working capital buffer.

Working Capital and Capital Expenditure Trends

Working capital-current assets minus current liabilities-is positive but consistently challenged by the company's aggressive investment strategy. For the first nine months of 2025, The York Water Company (YORW) invested a significant $37.1 million in capital projects, including main extensions and system upgrades. They plan to invest an additional $10.0 million before the year is out, pushing the total estimated capital expenditure for 2025 to $47.1 million. This is money that has to come from somewhere, which brings us to the cash flow statement.

Cash Flow Statements Overview: Funding the Infrastructure

The Cash Flow Statement is the real story here, showing how The York Water Company (YORW) funds its operations and growth. The utility business model generates predictable, stable cash flow from operations (OCF), but the capital expenditure (CapEx) demands are enormous.

Here's the quick math: The over $21 million in OCF for the first nine months is not enough to cover the $37.1 million in CapEx, so the company must turn to the capital markets. This is where the Financing Cash Flow comes in, showing a significant inflow of over $43 million from issuing long-term debt to bridge that gap. They also paid out nearly $9.5 million in dividends to shareholders.

Potential Liquidity Concerns and Strengths

The primary strength is the stability of the OCF, which is guaranteed by the essential nature of the water utility business. It's a recession-proof cash stream. The key concern, however, is the reliance on debt. As of September 30, 2025, total long-term debt was over $226 million. This debt load is growing to fund necessary infrastructure improvements, and the interest expense rose 15.4% year-to-date in Q3 2025. This rising cost of debt eats into net income, which is why net income for the first nine months of 2025 actually decreased by $292,000 despite revenue growth.

To get a full picture of how this debt impacts the bottom line, you can read more in the full post: Breaking Down The York Water Company (YORW) Financial Health: Key Insights for Investors.

So, while the day-to-day liquidity is fine, the long-term solvency hinges on regulatory approval for rate increases-like the request filed in May 2025-to ensure the company can recover its costs and service its growing debt.

Action for Investors: Monitor the outcome of the rate case and the interest expense trend in the Q4 2025 report.

Valuation Analysis

You're looking at The York Water Company (YORW), a stock that has paid a dividend for over 200 years, but the question remains: is it a good buy right now? The short answer is that the market currently sees it as fairly valued, leaning toward a premium, which is typical for a regulated utility with such a long dividend history.

The consensus analyst rating as of November 2025 is a Hold. This follows a recent upgrade from a 'sell' to a 'hold' by Wall Street Zen on November 9, 2025. This rating signals that while the business is stable, the current stock price of approximately $31.92 (as of November 21, 2025) is already reflecting its near-term growth prospects.

Is The York Water Company Overvalued or Undervalued?

To determine if The York Water Company is overvalued, we need to look past the stock price and into core valuation multiples. For a steady utility, these ratios tell the real story about what you are paying for each dollar of earnings, assets, and cash flow. Here's the quick math based on late 2025 data:

• Price-to-Earnings (P/E): The trailing P/E ratio is about 23.30x, and the forward P/E (based on 2025 estimates) is around 23.64x. This is higher than many industrial peers, suggesting investors are paying a premium for its regulated earnings stability and dividend reliability.
• Price-to-Book (P/B): The P/B ratio is approximately 1.94x. This means the stock trades at nearly twice the value of its net assets, which is a manageable premium for a capital-intensive utility, but it's defintely not a bargain.
• Enterprise Value-to-EBITDA (EV/EBITDA): The trailing EV/EBITDA is around 10.6x (as of October 2025). This metric, which is great for comparing utilities with different debt levels, sits slightly above the industry median, confirming the stock is priced for quality.

The stock's 52-week trading range shows a high of $36.60 and a low of $29.68, indicating the current price is closer to the low end of its recent volatility. Still, over the last year, the stock has seen a decrease of about -10.61%. This decline maps a near-term risk related to higher interest rates making the debt of capital-intensive utilities more expensive, even as the company continues to invest, estimating an additional $36.7 million in capital projects in 2025 alone.

Dividend Health and Payout

The York Water Company's dividend is a major part of its investment thesis. The company currently pays an annual dividend of $0.88 per share, resulting in a dividend yield of about 2.75%.

The payout ratio-the percentage of earnings paid out as dividends-is a healthy 63% of earnings. This level is sustainable and allows the company to reinvest in infrastructure, which is crucial for a utility. They have increased their dividend for 27 consecutive years, which is a massive signal of financial discipline and stability. You can dive deeper into their long-term strategy here: Mission Statement, Vision, & Core Values of The York Water Company (YORW).

Here is a summary of the key valuation metrics:

What this estimate hides is the potential for rate case approvals to significantly boost future earnings, which is a constant opportunity for regulated utilities. Your action now should be to monitor the stock for any dips closer to its 52-week low of $29.68 for a better entry point, or wait for a clear upside catalyst from a favorable regulatory ruling.

Risk Factors

You're looking at The York Water Company (YORW) because of its rock-solid utility status, but even a 200-year-old company faces real, near-term headwinds. The core issue right now is a classic utility squeeze: massive mandatory infrastructure spending is hitting earnings before the regulatory relief kicks in. It's a timing problem, defintely not a structural one.

The biggest risk impacting your investment is the Regulatory Lag from the pending rate case. In May 2025, The York Water Company filed for a general rate increase to generate an additional $24.2 million in annual revenue, which is a significant boost-about a 32% increase over 2024 earnings. However, the Pennsylvania Public Utility Commission (PUC) voted in July 2025 to suspend and investigate the proposal, pushing the final decision out to March 1, 2026. This seven-month variance in when that new revenue materializes is a critical uncertainty for cash flow planning and is what analysts call regulatory lag.

This regulatory uncertainty directly compounds the Operational and Financial Risks highlighted in the 2025 earnings reports. For the first nine months of 2025, The York Water Company's net income decreased by $292,000 to $14.891 million, and Earnings Per Share (EPS) dropped to $1.03. Why? The company is spending heavily to upgrade its system, which means higher costs are hitting the income statement immediately:

• Operation and maintenance expenses rose 5.7% to $36.73 million.
• Interest expenses surged 15.4% to $7.56 million due to increased long-term debt levels used for financing construction.
• A lower Allowance for Funds Used During Construction (AFUDC) also reduced non-operating income.

The company is essentially taking an earnings hit now to ensure long-term stability and compliance. That's the trade-off.

Mitigation Strategies and Clear Actions

The company's strategy for navigating these risks is straightforward and proactive: spend the money now to fix the core problem, then file for the rate increase to recover the costs. The financial health is strong enough to handle it for now, with $653.73 million in total assets as of June 30, 2025.

The primary mitigation plan is the $145 million capital investment program (since 2022 through early 2027). This spending directly addresses the operational risk of aging infrastructure and the external risk of non-compliance with increasingly strict environmental regulations. Plus, they are using the Distribution System Improvement Charge (DSIC) to collect revenue for some qualifying infrastructure replacements outside of the full rate case process.

Here are the concrete steps The York Water Company is taking with that investment:

• Replace nearly 30 miles of aging water mains to reduce leaks and maintenance costs.
• Upgrade wastewater treatment plants and dams to meet current Department of Environmental Protection standards.
• Replace all known company-owned lead service lines, a major regulatory and public health priority.

The main strategic risk is public backlash, as the proposed increase for the average residential customer is substantial: up to $14.16 more per month for water and $35.85 more per month for wastewater. The company will need to manage this perception carefully, linking the cost directly to the necessity of safe, modern infrastructure. You can learn more about their long-term vision in their Mission Statement, Vision, & Core Values of The York Water Company (YORW).

Here's the quick math: the near-term earnings pressure is a temporary cost of doing business in a regulated utility environment. The upside is a more resilient system and a $24.2 million revenue boost waiting on a PUC signature.

The current earnings dip is a short-term side effect of a necessary long-term capital plan. You need to watch the PUC's March 2026 decision closely.

Growth Opportunities

The York Water Company (YORW) is a classic utility play: slow, steady, and predictable growth, but with a clear path to boosting its rate base and earnings per share (EPS). You should expect a solid 6.99% EPS growth next year, moving from the current fiscal year's forecast of $1.43 per share to an estimated $1.53 in the next year. That's not a tech stock return, but it's defintely a reliable one.

The core of this growth isn't a new product, but a regulatory mechanism and smart capital deployment. The company's revenue growth is driven by two main factors: an expanding customer base and the Distribution System Improvement Charge (DSIC). The DSIC is a Pennsylvania Public Utility Commission (PUC) allowed charge that lets The York Water Company recover costs for replacing aging infrastructure without a full rate case, giving them a continuous, small revenue lift.

Here's the quick math on their strategic spending for 2025:

• Invested in capital projects through Q3 2025: $37.1 million
• Estimated additional investment for Q4 2025: $10.0 million
• Total 2025 planned capital spending: approximately $47.1 million

Strategic Initiatives and Acquisitions

The York Water Company's strategy is simple: grow the customer count and invest heavily in the infrastructure. They are actively pursuing acquisitions to expand their footprint in south-central Pennsylvania. For example, in September 2025, they announced an agreement to acquire the wastewater system at the Pine Run Retirement Community, which will add 141 wastewater customers to their base. This follows the water system acquisition there in late 2024, consolidating service for greater efficiency.

The biggest near-term opportunity, however, is regulatory. In May 2025, the company filed a rate increase request with the PUC, aiming for a $24.2 million increase in annual revenues. This revenue is needed to support a massive $145 million investment in infrastructure upgrades, including replacing aging water mains and expanding wastewater treatment plants. A decision is expected by March 2026, and if approved, it will significantly boost the company's rate base and future earnings power.

Competitive Advantages and Financial Position

In the utility space, the competitive advantage is the regulated monopoly. The York Water Company operates in a franchised territory, meaning it faces virtually no direct competition for its core services. This leads to incredibly stable and predictable cash flows, which is why they declared their 619th consecutive dividend in August 2025. That's a testament to the business model's resilience.

Still, managing costs is key. The company's financial results for the first nine months of 2025 showed operating revenues of $58.016 million, an increase from the previous year, but net income actually decreased to $14.891 million due to higher operation and maintenance expenses, depreciation, and interest on debt. This highlights the constant balance a utility must strike between necessary infrastructure investment and operational efficiency, especially with rising interest rates.

For a deeper dive into their balance sheet and valuation, check out our full analysis: Breaking Down The York Water Company (YORW) Financial Health: Key Insights for Investors.

Here is a snapshot of their nine-month 2025 performance:

Your next step is to monitor the PUC's decision on the rate request; that March 2026 timeline is the most important catalyst for future growth.