SJW Group Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions

SJW Group (NASDAQ:SJW) just released its quarterly report and things are looking bullish. It was overall a positive result, with revenues beating expectations by 4.4% to hit US$168m. SJW Group also reported a statutory profit of US$0.49, which was an impressive 35% above what the analysts had forecast. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on SJW Group after the latest results.

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Taking into account the latest results, the most recent consensus for SJW Group from four analysts is for revenues of US$794.7m in 2025. If met, it would imply a modest 3.7% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to accumulate 2.9% to US$2.97. In the lead-up to this report, the analysts had been modelling revenues of US$774.8m and earnings per share (EPS) of US$2.97 in 2025. There doesn't appear to have been a major change in sentiment following the results, other than the small lift in revenue estimates.

See our latest analysis for SJW Group

Even though revenue forecasts increased, there was no change to the consensus price target of US$61.00, suggesting the analysts are focused on earnings as the driver of value creation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on SJW Group, with the most bullish analyst valuing it at US$66.00 and the most bearish at US$57.00 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the SJW Group's past performance and to peers in the same industry. It's pretty clear that there is an expectation that SJW Group's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 4.9% growth on an annualised basis. This is compared to a historical growth rate of 8.0% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 6.4% annually. Factoring in the forecast slowdown in growth, it seems obvious that SJW Group is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Fortunately, they also upgraded their revenue estimates, although our data indicates it is expected to perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for SJW Group going out to 2027, and you can see them free on our platform here.

And what about risks? Every company has them, and we've spotted 2 warning signs for SJW Group (of which 1 is a bit unpleasant!) you should know about.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.