Pure Cycle Corp (PCYO) stock analysis

P/E below its 5-year median

Pure Cycle's P/E of 17.7 is below its own 5-year median of 25.1.

P/E below the industry

Pure Cycle's P/E of 17.7 is below the Water Supply median of 22.7.

EV/EBITDA below its 5-year median

Pure Cycle's EV/EBITDA of 17.7 is below its 5-year median of 24.6.

P/B below the industry

Pure Cycle's price-to-book of 1.72 is below the Water Supply median of 1.80.

Trading below fair value

The share price of $10.82 is below our fair value estimate of $13.33.

Margin of safety under 20%

The price is 18.8% below fair value, less than the 20% cushion we look for.

Revenue growing under 10% a year

Revenue grew 4.3% a year over the last three fiscal years, short of the 10% we look for.

EPS growing 10%+ a year

Diluted EPS grew 10.5% a year over the last three fiscal years.

Earnings growth not accelerating

Net income grew 8.2% over the last twelve months, against a 5-year average of 14.2% a year.

Growing faster than the industry

Revenue grew 22.9% over the last twelve months; the Water Supply median is 5.9%.

Company guidance

No outlook found in earnings releases from the last twelve months.

Gross margin slipping

Gross margin was 62.0% over the last twelve months, against 66.4% a year earlier.

Return on equity under 15%

Return on equity was 10.2% over the last twelve months and averaged 10.7% over five years; we look for 15% on both.

Return on capital under 10%

Return on invested capital was 6.7%, below the 10% that usually covers the cost of capital.

Return on equity above the industry

Pure Cycle's return on equity of 10.2% is above the Water Supply median of 9.2%.

Earnings grew over 5 years

Net income grew 14.2% a year on average over the last five fiscal years.

Net margin below its 5-year average

Net margin was 43.7% over the last twelve months, against a 5-year average of 56.4%.

Net margin above the industry

Pure Cycle's net margin of 43.7% is above the Water Supply median of 20.1%.

Low debt

Debt is 9.3% of shareholders' equity, under the 40% we consider low.

Debt rising against equity

Debt to equity rose from 0.0% five years ago to 9.3%.

Debt covered by cash flow

Operating cash flow over the last twelve months equals 53.6% of total debt.

Interest well covered

Operating income covers interest expense 25.4 times.

Short-term assets cover short-term debts

Current assets are 1.53 times current liabilities.

Low bankruptcy risk

The Altman Z-score is 6.69; above 3 is the safe zone and below 1.8 the distress zone.

No dividend

Pure Cycle has not paid a dividend in the last twelve months.

Yield against Treasuries

No dividend.

Yield against the market

No dividend.

Dividend stability

No dividend.

Earnings cover

No dividend.

Cash-flow cover

No dividend.