Equity Research Analysis: PURE CYCLE CORP (PCYO)
|Blank Capital Research Unit|Spot: $10.71
Price$10.71
Composite Score40.0/100
RatingREDUCE (2★)
Rank#3543 OF 7,333
Market Cap$274M
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Verdict
Quantitative factor alignment verified for current market regime.
Quant Score
Rank
#3543
Positioning
Market Dominance
Transportation, Communications, Electric, Gas, And Sanitary Services
Utilities
$274M
Mark W. Harding
Pure Cycle Corporation designs, constructs, operates, and maintains water and wastewater systems in the Denver metropolitan area and Colorado Front Range. It operates in two segments, Wholesale Water and Wastewater Services, and Land Development. Pure Cycle was founded in 1976 and is based in Watkins, Colorado.
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| Stock | Rating | Score▼ | Quality | Value | Momentum | P/E | EV/EBITDA | ROE | ROA | Gross Mgn | Op Mgn | Net Mgn | Rev Growth | Div Yield | D/E | Mkt Cap | AUDIT |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
$UGP ULTRAPAR HOLDINGS INC | 79 | 90 | 95 | 87 | - | - | - | - | - | - | - | - | - | - | $0 | VS | |
$TNK TEEKAY TANKERS LTD. | 78 | 94 | 97 | 82 | - | - | - | - | - | - | - | - | - | - | $0 | VS | |
$DHT DHT Holdings, Inc. | 75 | 84 | 88 | 78 | - | - | - | - | - | - | - | - | - | - | $0 | VS | |
$STNG Scorpio Tankers Inc. | 75 | 86 | 95 | 74 | - | - | - | - | - | - | - | - | - | - | $0 | VS | |
$NAT NORDIC AMERICAN TANKERS Ltd | 75 | 82 | 88 | 87 | - | - | - | - | - | - | - | - | - | - | $0 | VS | |
$AMX AMERICA MOVIL SAB DE CV/ | 74 | 86 | 81 | 68 | - | - | - | - | - | - | - | - | - | - | $0 | VS | |
$PAC Pacific Airport Group | 73 | 94 | 80 | 78 | - | - | - | - | - | - | - | - | - | - | $0 | VS | |
$GSL Global Ship Lease, Inc. | 73 | 82 | 94 | 81 | - | - | - | - | - | - | - | - | - | - | $0 | VS | |
$TRMD TORM plc | 73 | 86 | 94 | 65 | - | - | - | - | - | - | - | - | - | - | $0 | VS | |
$VIV TELEFONICA BRASIL S.A. | 73 | 82 | 90 | 78 | - | - | - | - | - | - | - | - | - | - | $0 | VS | |
$PCYO PURE CYCLE CORP | 40 | 43 | 43 | 32 | 22.4x | 43.7x | 7.8% | 6.9% | 58.4% | 17.6% | 45.6% | 20.1% | 0.0% | 5.0x | $274M | ||
| SECTOR BENCH | - | - | - | - | - | 16.9x | 6.1x | 11.9% | 3.2% | 52.6% | 14.8% | 7.7% | 4.2% | 1.4% | 1.3x | - | REF |
PURE CYCLE CORP (PCYO) receives a "Reduce" rating with a composite score of 40.0/100. It ranks #3543 out of 7,333 stocks in our coverage universe and carries a 2-star rating. Ratings are driven by a 6-factor quantitative model measuring quality, value, momentum, investment, stability, and short interest.
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Lagging peers — losers tend to keep underperforming
Fair valuation relative to peers
Average quality profile
Low volatility — smoother ride and historically better risk-adjusted returns
Aggressive spending — empire-building risk, dilutive growth
Mid-range overall rating
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Relative valuation derived from Transportation, Communications, Electric, Gas, And Sanitary Services sector benchmarks. Model weights: EV/EBITDA (40%), P/B (35%), P/S (25%). Re-calculated daily.
Projection based on user-defined inputs. Re-calculated daily against current market data.
Reverse DCF Framework — Mauboussin Methodology
Institutional-grade Reverse DCF analysis. This model identifies the growth hurdles embedded in current market prices. When implied growth is significantly lower than historical or projected rates, a margin of safety may exist. Re-audited daily.
No analyst ratings for PCYO.
View All Ratings| Factor | Global | Sector | Tilt |
|---|---|---|---|
| PROFITABILITY | 43 | 44 | -1NEUTRAL |
| MOMENTUM | 32 | 24 | +8ALPHA |
| VALUATION | 43 | 44 | -1NEUTRAL |
| INVESTMENT | 27 | 16 | +11ALPHA |
| STABILITY | 65 | 66 | -1NEUTRAL |
| SHORT INT | 36 | 30 | +6ALPHA |
Global = full universe. Sector = relative to industry peers. Positive tilt indicates idiosyncratic strength.
ROE proxy 7.8% (sector 11.9%)
GM 58% vs sector 53%, OM 18% vs sector 15%
Capital turnover N/A
Rev growth 20%, 11yr history
Interest coverage N/A
Composite assessment of profitability, capital efficiency, and financial strength. Top-tier entities demonstrate sustainable cash flow generation and elite competitive moats.
Profit generated per dollar of shareholder equity
Efficiency of asset utilization
Pricing power and cost efficiency
Core business profitability
Bottom-line profitability
The Quality factor evaluates the persistence and magnitude of realized cash flows. Companies with scores >70 exhibit superior pricing power and structural financial resilience through diverse economic regimes.
Our uncertainty rating tracks the predictability of future cash flows and potential for permanent capital loss. Moderate visibility with standard industry cyclicality.
We rate PURE CYCLE CORP (PCYO) as a Reduce with a composite score of 40.0/100 at a current price of $10.71. The quantitative profile shows weakness across multiple dimensions, suggesting limited upside potential.
PURE CYCLE CORP holds a top-quartile position (#0 of 50) within the Transportation, Communications, Electric, Gas, And Sanitary Services sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 40.0/100 places it at rank #3543 in our full universe.
No Moat
Low
Standard
Fair Value
Gross margins of 58% signal strong pricing power.
Stable competitive position in a defensive sector.
Weak momentum suggests persistent institutional selling pressure.
Vulnerability to macroeconomic shocks and interest rate volatility.
PURE CYCLE CORP represents a reduce based on multi-factor quantitative performance.
PURE CYCLE CORP receives a Reduce rating from our analysis, with a composite score of 40.0/100 and 2 out of 5 stars, ranking #3543 out of 7,333 stocks. PCYO's factor profile shows weakness across multiple dimensions, suggesting the stock may underperform going forward. Existing holders may want to consider trimming positions or tightening stop-losses.
PCYO's quality score of 43/100 is below average, suggesting challenges with profitability or capital efficiency. The company reports a return on equity of 7.8% (sector avg: 11.9%), gross margins of 58.4% (sector avg: 52.6%), net margins of 45.6% (sector avg: 7.7%). Investors should examine whether management is actively addressing these weaknesses or if they reflect structural industry headwinds.
With a value score of 43/100, PCYO appears somewhat expensive relative to its fundamentals. Key valuation metrics include a P/E ratio of 22.37x, an EV/EBITDA of 43.66x, a P/B ratio of 1.75x. Investors paying a premium here are likely betting on above-average growth or margin expansion to justify current prices.
PURE CYCLE CORP's investment score of 27/100 suggests limited reinvestment activity. Key growth metrics include revenue growth of 20.1% vs. a sector average of 4.2% and a return on assets of 6.9% (sector: 3.2%). While this can be positive for mature, cash-generative businesses returning capital to shareholders, it may also signal a lack of growth opportunities or management conservatism.
PCYO is currently showing below-average momentum at 32/100, which may indicate weakening institutional interest or negative sentiment shifts. Revenue growth stands at 20.1% year-over-year, while a beta of 0.54 reflects its sensitivity to broader market moves. Investors should note that declining momentum can precede further price weakness, though contrarian opportunities sometimes emerge at these levels.
PCYO shows good financial stability with a score of 65/100. Key stability metrics include a beta of 0.54 and a debt-to-equity ratio of 5.00x (sector avg: 1.3x). This suggests manageable leverage and moderate price volatility, making it appropriate for investors seeking a balance between growth potential and capital preservation.
PURE CYCLE CORP's short interest score of 36/100 reveals significant bearish positioning, suggesting institutional investors are actively betting against the stock. Specific risk factors include elevated leverage (D/E: 5.00x), micro-cap liquidity risk. At $274M (micro-cap), PCYO carries meaningful risk and is best suited for investors with high risk tolerance who have thoroughly evaluated the bear thesis.
PURE CYCLE CORP is a micro-cap company in the Transportation, Communications, Electric, Gas, And Sanitary Services sector, ranked #0 of 50 in its sector (100th percentile) and #3543 of 7,333 overall (52nd percentile). Key comparisons include ROE of 7.8% trailing the 11.9% sector median and operating margins of 17.6% above the 14.8% sector average. This top-quartile standing reflects exceptional competitive strength relative to Transportation, Communications, Electric, Gas, And Sanitary Services peers.
While PCYO currently exhibits a REDUCE profile, superior opportunities exist within the TRANSPORTATION, COMMUNICATIONS, ELECTRIC, GAS, AND SANITARY SERVICES sector. Our model identifies several "Strong Buy" candidates with higher quality scores and more attractive valuations among direct industry competitors.
View Top Transportation, Communications, Electric, Gas, And Sanitary Services Alpha →Quant Factor Profile
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Improvement in Investment (27) would have the largest impact on the composite score.
EV/EBITDA 615% ABOVE SECTOR MEDIAN
ROE 34% BELOW SECTOR MEDIAN
Gross Margin 11% ABOVE SECTOR MEDIAN (FAVORABLE)
Above 50MA
37.18%
Net New Highs
+51081
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Operator: Good morning, everyone, and welcome to Pure Cycle Corporation