Current Price
$54.86
Intrinsic Value
Use the calculator below to estimate
COMPETITIVE MOAT
↑Essential Service Monopoly
SJW Group operates as a regulated utility, providing a vital service with limited competition. This creates a natural monopoly in its service territories, ensuring consistent demand.
↑High Capital Intensity
The water utility industry requires substantial ongoing investment in infrastructure. This high barrier to entry deters new competitors from entering SJW's established markets.
↑Regulatory Framework
Rate-setting by regulatory bodies provides a predictable revenue stream and shields SJW from aggressive price competition. This stability is a key advantage.
INVESTMENT RISKS
↓Aging Infrastructure
SJW faces significant costs to maintain and upgrade its aging water infrastructure. Unexpected failures can lead to substantial repair expenses and service disruptions.
↓Regulatory Changes
Changes in regulatory policy, such as stricter environmental standards or altered rate-setting mechanisms, could negatively impact SJW's profitability and operational flexibility.
↓Water Scarcity & Climate
Droughts and climate change pose risks to water availability and quality in SJW's service areas. This could necessitate costly investments in new water sources or conservation programs.
Customize the SJW valuation
Adjust the growth rate, discount rate, and exit multiple to see how the intrinsic value and margin of safety for SJW Group respond.
Open DCF Calculator for SJWCompany Overview
Operating across the United States, SJW Group, through its various subsidiaries, delivers essential water and wastewater utility services. Its operations encompass the full spectrum of water management, from sourcing and acquiring water supplies to their storage, purification, and subsequent distribution, including both wholesale and retail provision, alongside wastewater management services. Beyond its core utility offerings, SJW Group provides a range of non-regulated services. These include managing water system operations, undertaking maintenance contracts, and leasing antenna sites. It also offers specialized contracted services and manages sewer operations for other water utilities. Additionally, the company offers a unique "Linebacker protection plan" to its drinking water customers in Connecticut and Maine. The company utilizes a diverse portfolio of water sources. These include groundwater extracted from wells, surface water derived from watershed runoff and diversions, treated reclaimed water, and imported water acquired from the Santa Clara Valley Water District. SJW Group's extensive customer base spans multiple states. In California, the company serves approximately one million individuals through roughly 231,000 active connections. This extensive service area encompasses parts of San Jose and Cupertino, along with the cities of Campbell, Monte Sereno, Saratoga, and the Town of Los Gatos, plus surrounding unincorporated areas within Santa Clara County. Its operations further extend to Connecticut and Maine, where it supplies water to about 456,000 residents via 140,000 connections. This service covers 81 distinct municipalities across an area of approximately 269 square miles. Additionally, in the Texas corridor situated between San Antonio and Austin, SJW Group supports around 70,000 people through approximately 24,000 connections, covering about 266 square miles. Finally, its wastewater services cater to roughly 3,000 connections in Southbury, Connecticut. The company also holds significant real estate assets, including undeveloped land in both California and Tennessee, and manages commercial buildings and warehouse facilities within Tennessee. Established in 1985, the organization initially operated under the name SJW Corp. before rebranding as SJW Group in November 2016. Its corporate headquarters are located in San Jose, California.
Financial Metrics — SJW Stock Valuation Data
Revenue/Share (TTM)
$21.52
FCF/Share (TTM)
$-11.54
ROIC (TTM)
3.1%
ROE (TTM)
6.6%
P/FCF
n/m
EV/EBITDA
12.0x
FCF Yield
-21.92%
Debt/Equity
1.02x
SJW currently has negative free cash flow, so cash-flow ratios such as P/FCF and FCF yield do not give a meaningful read on whether the stock is cheap or expensive. A DCF valuation is unreliable until cash generation turns positive — focus on the path to profitability instead.
Frequently Asked Questions
What is the intrinsic value of SJW?
SJW Group currently generates $-11.54 in free cash flow per share. At the current price of $54.86, a DCF model would discount these cash flows at an appropriate WACC and apply a terminal growth rate to arrive at an intrinsic value. The result depends heavily on your growth and discount rate assumptions — a 1% change in WACC typically shifts the fair value estimate by 10-15%. In MiniValuator the model uses a single discount rate that you can edit directly, 10% by default, rather than a computed WACC.
Is SJW undervalued?
SJW currently has negative free cash flow, so its P/FCF ratio is not meaningful and cannot tell you whether the stock is cheap or expensive. With cash flow negative, a DCF-based undervalued or overvalued judgment is unreliable — look at the path back to positive cash generation instead.
How do I value SJW stock using DCF?
To perform a DCF valuation on SJW Group: (1) Start with the trailing free cash flow per share ($-11.54) as the base, (2) project future FCF growth over 5-10 years based on Regulated Water industry trends and company fundamentals, (3) apply a discount rate (WACC) reflecting SJW's risk profile — with a debt-to-equity of 1.02x, capital structure is an important factor, and (4) add a terminal value for cash flows beyond the projection period.
What is DCF valuation and how does it apply to SJW?
DCF (Discounted Cash Flow) estimates what a company is worth today based on its future cash generation. For SJW Group, this means projecting how much free cash flow the company will produce over the next 5-10 years, shaped by Regulated Water trends, then discounting those amounts to today's dollars. SJW's ROIC of 3.1% suggests the company may face challenges generating returns above its cost of capital.
How does WACC affect SJW stock valuation?
WACC (Weighted Average Cost of Capital) is the discount rate in a DCF model — it reflects the minimum return investors require. For SJW, with a debt-to-equity ratio of 1.02x, the capital structure directly influences WACC. A 1% increase in WACC typically reduces the intrinsic value by 10-15%. At an EV/EBITDA of 12.0x, the market's implied discount rate can be reverse-engineered for comparison. In MiniValuator you set this discount rate yourself as a single editable number, 10% by default, instead of computing a formal WACC.
Learn More
- See SJW PE Valuation → — Earnings-based stock valuation using PE ratio analysis
- DCF Methodology — Step-by-step guide to discounted cash flow analysis
- PE Methodology — Guide to PE ratio stock valuation
- WACC — Understanding the discount rate used in DCF
- Margin of Safety — How to evaluate downside protection
- Intrinsic Value — How to evaluate stock fair value
- How to Calculate Intrinsic Value — Complete guide for investors
Related Valuations
All Utilities valuationsDCF and P/E value SJW with different methods and assumptions, so the two conclusions can differ. Compare the P/E fair value.
Price as of 2025-05-05. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.