Companhia De Saneamento Basico Do Estado De Stock Upgraded (SBS)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

NEW YORK ( TheStreet) -- Companhia De Saneamento Basico Do Estado De (NYSE: SBS) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, notable return on equity, attractive valuation levels, expanding profit margins and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

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Highlights from the ratings report include:
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Water Utilities industry average. The net income increased by 39.4% when compared to the same quarter one year prior, rising from $261.67 million to $364.71 million.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Water Utilities industry and the overall market, CIA SANEAMENTO BASICO ESTADO's return on equity exceeds that of both the industry average and the S&P 500.
  • 36.28% is the gross profit margin for CIA SANEAMENTO BASICO ESTADO which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 26.17% significantly outperformed against the industry average.
  • The debt-to-equity ratio is somewhat low, currently at 0.77, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.72 is somewhat weak and could be cause for future problems.

Companhia de Saneamento Basico do Estado de S o Paulo SABESP provides basic and environmental sanitation services; and supplies treated water on a wholesale basis to residential, commercial, industrial, and governmental customers in the state of S o Paulo. Companhia De Saneamento Basico Do Estado De has a market cap of $6.64 billion and is part of the utilities sector and utilities industry. Shares are down 16% year to date as of the close of trading on Friday.

You can view the full Companhia De Saneamento Basico Do Estado De Ratings Report or get investment ideas from our investment research center.

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