Is California Water Service Group overvalued or undervalued?

As of 31 October 2025, the valuation grade for California Water Service Group moved from very expensive to expensive, indicating a shift towards a less favorable assessment. The company appears to be overvalued based on its current metrics, particularly with a P/E ratio of 20, which is higher than peers like Essential Utilities, Inc. at 16.89 and SJW Group at 17.09. Additionally, the EV to EBITDA ratio stands at 12.46, which is lower than American States Water Co. at 15.88, further supporting the overvaluation perspective.
The company’s dividend yield of 191.75% is notably high, but its ROCE of 6.36% and ROE of 8.20% suggest that it may not be generating sufficient returns relative to its valuation. Over the past year, California Water Service Group has underperformed significantly compared to the S&P 500, with a return of -14.59% versus the benchmark's 19.89%, reinforcing the notion that the stock may be overvalued in the current market environment.