Companhia de Saneamento Básico do Estado de São Paulo - SABESP (SBS) Stock Analysis & Winston Score

SABESP is a Brazilian utility company that provides clean drinking water and sewage treatment services to people and businesses in the state of São Paulo, Brazil. It serves roughly 29 million people across hundreds of municipalities, making it one of the largest water and sanitation companies in the world by population served. The São Paulo state government holds a controlling stake, though the company is publicly traded.

SABESP earns money by charging customers monthly fees for water supply and sewage collection and treatment, a classic regulated utility model. It operates almost entirely within São Paulo state, generating around $4–5 billion in annual revenue. Its main competitive advantage is its government-granted regional monopoly — customers cannot simply switch providers. A key growth driver is expanding sewage coverage, since a significant portion of its service area still lacks full sanitation infrastructure, but the main risk is regulatory rate decisions and Brazil's political and currency volatility, which can pressure earnings.

Winston Score History

Share count broadly stable

+0.1% over 4y

The share count has stayed roughly flat over this period — little dilution or buyback activity.

Diluted shares outstanding: 3.42B (2021) → 3.42B (2025)

Score breakdown

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Quality

Gross Margin

38.8%

Modest — 38.8% gross margin

Operating Margin

34.1%

Excellent — 34.1% operating margin

ROCE

3.5%

Weak — 3.5% return on capital

ROIC between 0% and 5%. They earn a few cents back per dollar invested in the business.

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Growth

Sales YoY

-13.2%

Shrinking sales (-13.2% YoY)

EPS YoY

-23.5%

Earnings shrinking (-23.5% YoY)

Earnings per share down more than 10%. Either a bad year, or a real decline.

EPS Consistency

6/8 quarters

Earnings grew in most of the last 8 quarters

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Cash Flow

Cash Conversion

94%

Modest — 94% of profit becomes cash

FCF Margin

9.9%

Modest free cash flow (9.9%)

FCF margin between 0% and 10%. Some cash from sales, but not a lot.

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Stability

Debt / Equity

1.17

Elevated debt (1.17)

Interest Cover

2.33x

Tight — interest eats into profit (2.3x)

Interest coverage between 1 and 3. Profits cover interest, but with little room to spare.

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Valuation

P/E Ratio (TTM)

2.3x

Attractive valuation — P/E 2.3

P/E under 10. The price tag is small relative to last year's profit.

P/E vs Forward

+0.2

GROWING

Earnings roughly flat

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Dividends

Dividend Yield

2.37%

Moderate income — 2.37% yield

Standard yield zone for stable dividend payers. A meaningful piece of total return.

Dividend Growth

+107.9%

Dividend growing fast (107.9% YoY)

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