Stock Analysis & Valuation The York Water Company (YORW)

• Previous Close: $33.58
• Sector Valuation Confidence Level: Moderate

Valuation method	Value, $	Upside, %
Artificial intelligence (AI)	18.94	-44
Intrinsic value (DCF)	15.59	-54
Graham-Dodd Method	10.55	-69
Graham Formula	19.10	-43

Strategic Investment Analysis

Company Overview

The York Water Company (NASDAQ: YORW) is the oldest investor-owned utility in the U.S., providing essential water and wastewater services to south-central Pennsylvania since 1816. The company operates a resilient water supply infrastructure, including two reservoirs (Lake Williams and Lake Redman) with a combined capacity of 2.2 billion gallons, a 15-mile pipeline from the Susquehanna River, and nine groundwater wells. Serving 51 municipalities across three counties, YORW supports diverse industries, including manufacturing, food production, and textiles. As a regulated utility, it benefits from stable, predictable cash flows under Pennsylvania Public Utility Commission oversight. With a market cap of ~$470M, YORW maintains a low-risk profile, underscored by its 0.79 beta and consistent dividend payouts. Its focus on infrastructure investment and regional monopoly position make it a key player in the regulated water utility sector.

Investment Summary

The York Water Company offers a defensive investment opportunity with stable revenue streams and a 207-year operating history. Its regulated monopoly status ensures predictable earnings, while a 0.79 beta indicates lower volatility than the broader market. The company’s $30.6M operating cash flow (2023) supports its $0.6408/share dividend, appealing to income-focused investors. However, growth is constrained by its small service area and capital-intensive model, with $205.6M in total debt. While its 1.42 diluted EPS demonstrates profitability, revenue growth is limited by rate-case approvals. YORW suits conservative investors seeking utility-sector exposure with moderate yield (dividend yield not calculable from provided data).

Competitive Analysis

YORW’s competitive advantage stems from its exclusive service territory in south-central Pennsylvania, protected by regulatory barriers that prevent direct competition. As a regulated utility, it earns authorized returns on infrastructure investments, ensuring steady margins. The company’s 2.2B-gallon reservoir capacity and diversified water sources (surface water, groundwater, and river intake) enhance reliability versus peers reliant on single sources. However, its geographic concentration (three counties) limits growth compared to multi-state water utilities. YORW’s small scale (~$75M revenue) restricts economies of scale enjoyed by national players like American Water Works. Its wastewater segment (eight systems) provides ancillary revenue but isn’t a differentiator. The primary risk is regulatory lag in rate approvals, though Pennsylvania’s constructive oversight mitigates this. YORW’s niche focus and local expertise defend against competition but cap upside.

Major Competitors

• American Water Works Company (AWK): AWK is the largest U.S. water utility, serving 14 states with ~$4B revenue (2023). Its scale allows superior infrastructure investment efficiency vs. YORW, but it lacks YORW’s hyper-local operational focus. AWK’s diversified footprint reduces regulatory risk but exposes it to varying regional policies.
• California Water Service Group (CWT): CWT operates in California’s high-growth but drought-prone markets. Its $1B market cap and regulatory expertise in a challenging environment contrast with YORW’s stable Northeast base. CWT faces higher climate risks but benefits from population growth tailwinds absent in YORW’s mature territory.
• Artesian Resources Corporation (ARTNA): This Delaware-based water utility mirrors YORW’s regional focus but with a coastal service area. Its $0.3B market cap and similar scale highlight comparable growth constraints. ARTNA’s dividend yield (~2.5%) and regulated model align with YORW, though it serves a more demographically dynamic region.