It has been about a month since the last earnings report for California Water Service Group (CWT). Shares have added about 3.7% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is California Water Service Group due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
California Water Service Q1 Earnings Miss Estimates on Higher Costs
California Water Service Group posted first-quarter 2026 earnings of 7 cents per share, down 68.2% from 22 cents a year ago. The figure missed the Zacks Consensus Estimate of 25 cents per share by 72.0%.
The earnings shortfall reflected cost pressure across the income statement. Total operating expenses rose 8.1% year over year to $196.4 million, outpacing the growth in operating revenues.
CWT’s Revenues
Quarterly revenues were $215 million, up 5.2% from the year-ago period. The top line came in below the consensus mark of $218 million by 1.38%.
Operating revenues increased $10.6 million year over year, supported by rate-related items and higher accrued and unbilled revenues. At the same time, customer usage declined, pressuring billed consumption for the quarter.
CWT’s management attributed the usage decline to climate variability between the periods, while noting that rate changes and higher accrued and unbilled revenues contributed meaningfully to quarterly revenues. This mix underscores the company’s continued reliance on regulatory constructs and billing dynamics to smooth results through seasonal demand swings.
CWT’s Operational Highlights
Water production costs increased $8.3 million year over year to $71.3 million, driven primarily by higher wholesale water rates. Depreciation and amortization also climbed to $40 million as additional capital assets were placed into service.
During the quarter, CWT announced an agreement to acquire Nexus Water Group’s water and wastewater systems in Nevada and Oregon for approximately $218 million. The transaction is expected to add about 36,000 customer equivalent residential units and roughly $109 million of rate base, expanding the company’s footprint beyond California.
CWT continues to invest heavily in its regulated systems, a strategy that supports long-term rate base growth but also raises near-term non-cash costs. The quarter’s step-up in depreciation expense reflected ongoing infrastructure work and new assets entering service.
The company’s expense profile also showed higher financing-related pressure. Net interest expense increased to $18.6 million from $15.7 million in the prior-year quarter, which further weighed on profitability as capital spending and funding needs expanded.
California Water Rate Case Milestone and Catch-Up
A key near-term swing factor remains California Water Service’s 2024 California General Rate Case. The company received a revised proposed decision on April 29, 2026, and received the final decision yesterday.
Importantly, the decision authorizes incremental revenues of $90.5 million in 2026, plus additional increases of $43.2 million in 2027 and $48.9 million in 2028. The filing also supports revenue stabilization through continued Monterey-Style mechanisms and additional balancing accounts, along with a new sales reconciliation mechanism aimed at improving fixed-cost recovery.
CWT’s Financial Highlights
CWT ended the quarter with $58.1 million in unrestricted cash and $45.6 million in restricted cash. The company also highlighted access to revolving credit facilities totaling $600 million, expandable to $800 million, with maturities extending to March 2028.
Long-term debt as of March 31, 2026, was $1.472 billion compared with $1.471 billion as of Dec. 31, 2025.
Strategic activity remains in focus. Shareholder returns stayed intact despite the earnings miss. The board declared a quarterly dividend of 33.50 cents per share, marking the 325th consecutive quarterly dividend, and communicated an expected annualized dividend of $1.34 per share following its 59th annual dividend increase.
Cash flow from operational activities in first-quarter 2026 was $49.4 million compared with $38.4 million in the year-ago quarter.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a upward trend in fresh estimates.
VGM Scores
Currently, California Water Service Group has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for value investors.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. Notably, California Water Service Group has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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California Water Service Group (CWT): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).