Is California Water Service Group overvalued or undervalued?

As of 1 May 2025, California Water Service Group's valuation grade has moved from fair to very expensive, indicating a significant shift in its perceived value. The company is currently overvalued based on its key financial ratios, including a P/E ratio of 20, an EV to EBITDA ratio of 12.46, and a Price to Book Value of 1.67. In comparison, American States Water Co. has a higher P/E of 24.36 and an EV to EBITDA of 16.53, while SJW Group is more favorably valued with a P/E of 18.02 and an EV to EBITDA of 12.28.
The company's dividend yield stands at an impressive 191.75%, but its ROCE and ROE are relatively low at 6.36% and 8.20%, respectively, suggesting inefficiencies in generating returns. Despite a recent stock return of 3.13% over the past week, California Water Service Group has underperformed against the S&P 500 over longer periods, particularly in the 3-year and 5-year comparisons, where it lagged significantly. Overall, the current valuation reflects an overvaluation of the stock in light of its financial performance and peer comparisons.