H2O America (HTO) is overvalued and Companhia de Saneamento Basico do Estado de Sao Paulo ADR (SBS) is undervalued.
Against our estimates of intrinsic value, SBS trades at the wider discount: a margin of safety of +53%, against -42% for HTO.
Values as of the 22 Sept 2026 close.
Discounting its cash flows at 6.7% (average of 3 methods) values the shares at $44.37; the price of $62.92 is 42% above that value, and 84% of that value comes from beyond year five.
Leak Score 14/100 on 3 of 12 signals
Discounting its cash flows at 7.6% (average of 3 methods) values the shares at $11.52; the price of $5.39 is 53% below that value, and 81% of that value comes from beyond year five.
Leak Score 84/100 on 3 of 12 signals
| Metric | HTO | SBS |
|---|---|---|
| Verdict | Overvalued | Undervalued |
| Price | $62.92 | $5.39 |
| Intrinsic value | $44.37 | $11.52 |
| Margin of safety | -42% | +53% |
| Leak Score | 14/100 (3/12) | 84/100 (3/12) |
| Market cap | $2.6B | $18.9B |
| Revenue growth, 5 years | 7.2% | 14.6% |
| Operating margin | 21.5% | 31.0% |
| Net margin | 12.9% | 19.6% |
| Return on equity | 6.5% | 18.8% |
| Debt to equity | 1.03 | 1.14 |
| P/E | 22.2x | 12.4x |
| Forward P/E | 22.3x | 11.7x |
| P/B | 1.4x | 2.2x |
| Dividend yield | 2.8% | 2.9% |