EARNINGS CALL 2024 SAFE HARBOR STATEMENT This presentation does not contain projections or estimates of future events. However, it may include forward-looking statements that indicate potential trends related to Sabesp, based on the reasonable expectations, beliefs, and assumptions of the Company's management. The use of expressions such as "projects," "estimates," "anticipates," "foresees," "plans," "expects," and similar terms shall not be construed as forecasts or guidance for purposes of applicable regu ...

Core Viewpoint - The article emphasizes the importance of identifying sustainable trends in short-term investing to maximize profits, highlighting the need for strong fundamentals and positive earnings revisions to maintain momentum in stock prices [1][2]. Group 1: Stock Performance - Sabesp (SBS) has shown a solid price increase of 5% over the past 12 weeks, indicating investor confidence in its potential upside [4]. - The stock has experienced a significant price increase of 16.1% over the last four weeks, suggesting that the upward trend is still intact [5]. - SBS is currently trading at 88.2% of its 52-week high-low range, indicating a potential breakout opportunity [5]. Group 2: Fundamental Strength - SBS holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises, which are critical for near-term price movements [6]. - The stock has an Average Broker Recommendation of 1 (Strong Buy), reflecting high optimism from the brokerage community regarding its near-term performance [7]. Group 3: Investment Strategy - The "Recent Price Strength" screen is a useful tool for identifying stocks like SBS that have sufficient fundamental strength to sustain their recent uptrends [3]. - The article suggests that there are several other stocks passing through the "Recent Price Strength" screen, providing additional investment opportunities [8].

Core Insights - Zacks Premium offers various tools for investors to enhance their stock market strategies, including daily updates, research reports, and stock screens [1] - The Zacks Style Scores provide a unique rating system for stocks based on value, growth, and momentum, helping investors identify securities with high potential for market outperformance [2][3] Zacks Style Scores - The Style Scores categorize stocks into four types: Value Score, Growth Score, Momentum Score, and VGM Score, each focusing on different investment strategies [3][4][5][6] - Value Score identifies attractive stocks using financial ratios, while Growth Score assesses a company's financial health and future outlook [3][4] - Momentum Score focuses on price trends and earnings outlook, indicating favorable times for investment [5] - VGM Score combines all three styles to highlight stocks with the best overall potential [6] Zacks Rank - The Zacks Rank is a proprietary model that uses earnings estimate revisions to guide investors in building successful portfolios [7] - Stocks rated 1 (Strong Buy) have historically produced an average annual return of +25.41% since 1988, significantly outperforming the S&P 500 [8] - There are over 800 stocks rated 1 and 2, making it essential for investors to utilize Style Scores to narrow down choices [8][9] Stock Highlight: Sabesp (SBS) - Sabesp provides public water and sewage services in São Paulo, Brazil, and is primarily owned by the São Paulo government [11] - SBS holds a 2 (Buy) rating on the Zacks Rank and has a VGM Score of A, indicating strong potential [12] - The stock has shown a 14.8% increase over the past four weeks, with an upward revision in earnings estimates for fiscal 2024 [12] - SBS has an average earnings surprise of 30.8%, making it a strong candidate for investors [12][13]

Company Overview - Sabesp (SBS) is currently ranked 2 (Buy) in the Zacks Rank, indicating a strong potential for outperforming the market in the near term [3] - The stock has shown a year-to-date performance increase of approximately 12.6%, surpassing the average gain of 9% in the Utilities sector [4] Earnings Outlook - Over the past three months, the Zacks Consensus Estimate for Sabesp's full-year earnings has increased by 1.8%, reflecting improved analyst sentiment [4] - The company belongs to the Utility - Water Supply industry, which is currently ranked 56 in the Zacks Industry Rank, indicating a relatively strong position within its specific sector [6] Comparative Performance - In comparison, Telecom Italia (TIIAY) has a year-to-date return of 10.9% and also holds a Zacks Rank of 2 (Buy) [5] - The Utility - Water Supply industry, which includes Sabesp, has performed better than the average loss of 4.4% in its group, while Telecom Italia's industry, Diversified Communication Services, has seen a decline of 14.8% [6] Investment Consideration - Both Sabesp and Telecom Italia are highlighted as stocks to watch for investors interested in the Utilities sector due to their solid performance [7]

Core Viewpoint - The article emphasizes the importance of value investing and highlights Companhia de saneamento Basico Do Estado De Sao Paulo Sabesp (SBS) as a potentially undervalued stock based on various financial metrics [2][8]. Company Metrics - SBS holds a Zacks Rank of 2 (Buy) and a Value grade of A, indicating strong potential for value investors [4]. - The stock has a P/E ratio of 12.69, significantly lower than the industry average of 17.75 [4]. - SBS's Forward P/E has fluctuated between 10.93 and 16.72 over the past year, with a median of 13.85 [4]. - The PEG ratio for SBS is 0.76, compared to the industry average of 1.70, suggesting it is undervalued relative to its expected earnings growth [5]. - SBS has a P/B ratio of 1.41, which is lower than the industry average of 2.64, indicating a favorable market value compared to its book value [6]. - The P/CF ratio for SBS is 4.25, well below the industry average of 10.38, further supporting the notion of undervaluation [7]. Investment Outlook - The combination of these metrics suggests that SBS is likely undervalued at present, making it an attractive option for value investors [8].

Core Viewpoint - The recommendation is to hold Sabesp (NYSE: SBS) shares following the release of its 3Q24 results, continuing the previous recommendation made on July 9 [1]. Company Analysis - Sabesp's performance is being closely monitored, with insights provided to assist clients in making informed investment decisions [1]. Market Context - The analysis is based on over 5 years of experience in equity analysis within the Latin American market, indicating a strong understanding of regional dynamics [1].

Financial Performance - SABESP reported net operating revenue of R$ 6,749.4 million in 2Q24, an increase of 9.7% compared to R$ 6,154.5 million in 2Q23[12]. - Adjusted EBITDA totaled R$ 2,970.5 million in 2Q24, up by R$ 778.1 million (+35.5%) from R$ 2,192.4 million in 2Q23, with an adjusted EBITDA margin of 54.2%[14]. - Net income for 2Q24 reached R$ 1,209.4 million, reflecting a significant increase of 62.6% from R$ 743.7 million in 2Q23[14]. - The company experienced a significant increase in earnings before income tax and social contribution, reaching R$ 1,754.6 million in 2Q24, up by 66.0% from R$ 1,056.8 million in 2Q23[20]. - Adjusted net income (excluding IDP/AAPS) was R$ 1,209.4 million in Q2 2024, down 5.0% from R$ 1,273.3 million in Q2 2023[21]. - Net income for the period in 2Q24 was R$ 1,209,465 thousand, an increase of 62.5% from R$ 743,743 thousand in 2Q23[63]. Revenue Breakdown - Revenue from sanitation services increased by R$ 740.6 million (+14.3%) in 2Q24, driven by tariff adjustments and a 3.2% increase in total billed volume[15]. - SABESP's revenue from construction services was R$ 1,273.8 million in 2Q24, a slight increase of 0.8% from R$ 1,263.2 million in 2Q23[20]. - Water revenue for 2Q24 was R$ 3,142,900 thousand, up from R$ 2,749,015 thousand in 2Q23, representing an increase of 14.3%[60]. - Sewage revenue for 2Q24 reached R$ 2,752,827 thousand, compared to R$ 2,417,527 thousand in 2Q23, marking a growth of 13.9%[60]. - Net sanitation services revenue for 2Q24 was R$ 5,475,645 thousand, up from R$ 4,891,303 thousand in 2Q23, marking an increase of 11.9%[73]. Cost Management - Costs and expenses decreased to R$ 3,302.4 million in 2Q24, down by R$ 607.0 million (-15.5%) compared to R$ 3,909.4 million in 2Q23[19]. - The decrease in salaries, payroll charges, and benefits was R$ 598.7 million (-44.4%) in 2Q24, primarily due to a non-recurring provision for the Incentivized Dismissal Program (IDP) recognized in 2Q23[32]. - Treatment supplies fell by R$ 14.2 million (-10.3%) in 2Q24, attributed to strategies for chemical replacement and optimization of water usage[33]. - Service expenses increased by R$ 20.1 million (+3.1%) in 2Q24, mainly due to higher advertising and marketing expenses[35]. - General expenses rose by R$ 17.9 million (+4.5%) in 2Q24, driven by higher provisions for municipal transfers[41]. Financial Position - SABESP's total market value as of August 8, 2024, was R$ 63.33 billion, with shares priced at R$ 92.65 on B3 and US$ 16.32 on NYSE[11]. - The company’s total debt as of 2Q24 was R$ 21.78 billion, with 44% of the debt represented by debentures[54]. - Total current assets increased to R$ 9,761,148 thousand in 2Q24 from R$ 6,262,207 thousand in 2Q23, reflecting a growth of 55.0%[64]. - Total assets reached R$ 64,606,044 thousand in 2Q24, up from R$ 57,453,621 thousand in 2Q23, indicating an increase of 12.5%[64]. - Total liabilities increased to R$ 32,808,955 thousand in 2Q24 from R$ 28,706,060 thousand in 2Q23, reflecting a rise of 14.6%[66]. - The company’s equity rose to R$ 31,797,089 thousand in 2Q24, compared to R$ 28,747,561 thousand in 2Q23, marking an increase of 7.1%[66]. Investment Activities - Total investments in 2Q24 amounted to R$ 1,296.6 million, with R$ 549.2 million allocated to water and R$ 747.4 million to sewage[56]. - In 1H24, total investments reached R$ 2,717.0 million, with R$ 1,217.6 million in water and R$ 1,499.4 million in sewage[57]. - Cash flow from investing activities showed a net cash used of R$ 1,602,505 thousand in 2Q24, compared to R$ 723,812 thousand in 2Q23, indicating an increase in investment activities[71]. Operational Efficiency - Net cash generated from operating activities reached R$ 3,164,172 thousand in 2Q24, up from R$ 1,513,027 thousand in 2Q23, indicating a year-over-year increase of 109.5%[71]. - Cash and cash equivalents at the end of the year rose to R$ 2,809,311 thousand in 2Q24 compared to R$ 1,867,485 thousand in 2Q23, reflecting a significant increase of 50.4%[70]. - The company reported a decrease in the volume of measured water loss to 1.54% of water produced, down from 1.467%[52]. - The provision for doubtful accounts was $262,163, down from $380,231, indicating a reduction in credit risk[81]. - The company reported a decrease in trade accounts receivable by $(143,148), which may suggest improved collection efforts[81].

Core Viewpoint - The article emphasizes the importance of confirming the sustainability of stock trends for successful short-term investing, highlighting that price movements should be supported by strong fundamentals and positive earnings estimates [1][2]. Group 1: Stock Performance - Sabesp (SBS) has shown a solid price increase of 30.3% over the past 12 weeks, indicating strong investor interest in the stock [4]. - The stock has also maintained a price increase of 0.9% over the last four weeks, suggesting that the upward trend is still intact [5]. - Currently, SBS is trading at 89.5% of its 52-week high-low range, indicating a potential breakout [5]. Group 2: Fundamental Strength - SBS holds a Zacks Rank 1 (Strong Buy), placing it in the top 5% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises [6]. - The stock has an Average Broker Recommendation of 1 (Strong Buy), reflecting high optimism from the brokerage community regarding its near-term price performance [7]. - The Zacks Rank system has a strong historical performance, with Rank 1 stocks generating an average annual return of +25% since 1988 [7]. Group 3: Investment Strategy - The "Recent Price Strength" screen is a useful tool for identifying stocks like SBS that are on an uptrend supported by strong fundamentals [3]. - Investors are encouraged to explore other stocks that meet similar criteria, as there are over 45 Zacks Premium Screens available for different investing styles [8].

Core Viewpoint - The article emphasizes the importance of confirming the sustainability of stock trends for successful short-term investing, highlighting the use of a specific screening strategy to identify stocks with strong fundamentals and positive price momentum [1][2]. Group 1: Stock Performance - Sabesp (SBS) has shown a solid price increase of 24.1% over the past 12 weeks, indicating strong investor interest [4]. - The stock has also increased by 19.4% in the last four weeks, suggesting that the upward trend is still intact [5]. - SBS is currently trading at 96.3% of its 52-week high-low range, indicating a potential breakout [5]. Group 2: Fundamental Strength - SBS holds a Zacks Rank 1 (Strong Buy), placing it in the top 5% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises [6]. - The stock has an Average Broker Recommendation of 1 (Strong Buy), reflecting high optimism from the brokerage community regarding its near-term price performance [7]. Group 3: Investment Strategy - The "Recent Price Strength" screen is a useful tool for identifying stocks like SBS that have the fundamental strength to maintain their recent uptrend [3]. - The article suggests that there are several other stocks passing through this screening process, which could also be considered for investment [8].

However, like every investing tool, RSI has its limitations, and should not be used alone for making an investment decision. Sabesp (SBS) has been beaten down lately with too much selling pressure. While the stock has lost 11.7% over the past four weeks, there is light at the end of the tunnel as it is now in oversold territory and Wall Street analysts expect the company to report better earnings than they predicted earlier. Here's Why SBS Could Experience a Turnaround Here is How to Spot Oversold Stocks RS ...