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 slight improvement in its valuation perception. The company appears overvalued based on its current metrics, particularly with a P/E ratio of 20, which is higher than peers such as Essential Utilities, Inc. at 16.89 and SJW Group at 17.09. Additionally, the EV to EBITDA ratio stands at 12.46, which is also elevated compared to the industry average.
The company's dividend yield is notably high at 191.75%, but this may not compensate for its low ROCE of 6.36% and ROE of 8.20%, suggesting inefficiencies in generating returns relative to its equity. Over the past year, California Water Service Group has underperformed significantly, with a stock return of -10.31% compared to a 19.89% return for the S&P 500, reinforcing the notion that the stock may be overvalued in the current market environment.