Abstract

Sabesp will release its quarterly results on May 7, 2026 Post Market; investors are watching for revenue near 10.94 billion Brazilian real, EBIT near 3.17 billion Brazilian real, and EPS around 2.16, with attention on whether margins can hold close to last quarter’s levels.

Market Forecast

Consensus expectations embedded in current-quarter projections point to revenue of 10.94 billion Brazilian real, up 21.64% year over year, EBIT of 3.17 billion Brazilian real, up 20.34% year over year, and adjusted EPS of 2.16, implying 1.25% year-over-year growth; markets will parse whether gross and net margins hold near recent levels in the absence of explicit margin guidance. The main business remains the core revenue engine and is expected to track demand and tariff dynamics, with cost control and operating leverage as swing factors for EBIT conversion. Within the reported breakdown, the operating segment continues to carry the growth narrative with scale and volume resilience; investors will watch for sequential trends in volumes and top-line capture to gauge run-rate sustainability.

Last Quarter Review

Sabesp’s previous quarter delivered revenue of 11.28 billion Brazilian real, a gross profit margin of 34.02%, GAAP net profit attributable to the parent company of 2.69 billion Brazilian real, a net profit margin of 23.81%, and adjusted EPS of 4.29, with revenue up 43.85% year over year and EPS up 110.58% year over year. A key highlight was the substantial outperformance versus earlier projections: revenue topped expectations by 1.74 billion Brazilian real and EBIT achieved 3.86 billion Brazilian real, reflecting a 118.82% year-over-year increase and supporting robust earnings expansion. In the main business lines, the operating segment generated 9.85 billion Brazilian real, while reported deductions totaled 0.43 billion Brazilian real; the strong year-over-year revenue growth of 43.85% at the consolidated level underscored broad-based uplift.

Current Quarter Outlook

Main business momentum and execution levers

The core operating engine enters the quarter with a printed revenue base of 11.28 billion Brazilian real and recent gross and net margins at 34.02% and 23.81%, respectively. The market’s revenue projection of 10.94 billion Brazilian real assumes a normalization from last quarter’s elevated base while still delivering 21.64% year-over-year growth, suggesting confidence in demand resilience and tariff capture. Conversion to EBIT is a central focus: the 3.17 billion Brazilian real EBIT estimate implies 20.34% growth year over year, effectively targeting stability in operating spread despite input and overhead variability. Investors will monitor whether the revenue mix supports steady gross margin versus last quarter’s 34.02%, since even a modest deviation can meaningfully influence quarterly EBIT. Sequentially, last quarter’s net profit rose 24.41%, and the question for this quarter is whether top-line trends and cost efficiencies can sustain earnings quality even as EPS expectations indicate a more measured growth trajectory. A practical yardstick for execution will be the relationship between revenue growth and EBIT growth; if EBIT expands close to revenue growth, it will indicate stable operating leverage. Any divergence will point to either improvements in cost discipline or, alternatively, incremental pressure in controllable and non-controllable expenses.

Most promising earnings driver within the current mix

Within the reported structure, the operating segment remains the central earnings driver, with the last quarter recording 9.85 billion Brazilian real before total deductions of 0.43 billion Brazilian real. The current quarter’s forecast for EBIT growth of 20.34% year over year, paired with a 21.64% revenue increase, sets a framework where operational efficiency and cost pass-through are poised to be the incremental differentiators for margin durability. If realized, this alignment would translate into healthy EBIT conversion rates and provide a pathway for cash generation to track earnings despite EPS growth being guided at 1.25% year over year. The EPS trajectory suggests that non-operating items—such as financing and tax—could be the swing factors that compress the translation from operating profit to per-share earnings in the short term. In this context, delivering consistent operating performance would help anchor sentiment, while any incremental clarity on costs and below-the-line items could recalibrate EPS expectations. The pathway for upside surprise appears most closely tied to maintaining a tight spread between revenue growth and EBIT growth; should operating discipline hold, the segment can again act as the primary source of positive variance.

Share-price swing factors for this print

Three elements are likely to set the tone for the ADR in this reporting cycle. First, the degree to which revenue realizes at or above the 10.94 billion Brazilian real mark will shape the initial reaction; a revenue beat paired with EBIT in line would still be constructive if margin quality holds near last quarter’s levels. Second, conversion efficiency from revenue to EBIT and then to EPS will be scrutinized, given that EPS growth is projected at 1.25% year over year despite a 20.34% EBIT increase; clarity on any non-operating headwinds would be essential to interpreting this gap. Third, cash flow cadence and any commentary on capital allocation or cost timing may influence how durable the current margin profile is deemed to be for the remainder of the fiscal year. The ADR may also reflect currency translation dynamics around results, but the core determinant remains the company’s ability to defend or improve the operating spread implied in estimates. A consistent message that aligns revenue growth with stable or improving EBIT conversion would likely reinforce the constructive bias evident in institutional stances.

Analyst Opinions

Bullish vs. bearish ratio in the captured period stands at 100% to 0%. Bank of America Securities reiterated a Buy rating on Sabesp during the period under review, reflecting a constructive stance that aligns with the current-quarter framework of revenue up 21.64% year over year to 10.94 billion Brazilian real, EBIT up 20.34% to 3.17 billion Brazilian real, and a measured EPS progression of 2.16. This view coheres with the logic that recent execution—highlighted by last quarter’s 43.85% revenue expansion and 118.82% EBIT growth—provides a credible base for sustained operating performance, even as EPS growth moderates due to non-operating factors. The bullish perspective is likely to emphasize three points going into the print. First, revenue momentum remains intact on a year-over-year basis despite a sequential reset from last quarter’s elevated base; the growth rate embedded in forecasts implies the demand and pricing underpinnings remain supportive. Second, EBIT’s near-parallel growth with revenue suggests that operating margin can be broadly defended if cost pressures remain contained, which, if realized, would support cash generation and balance-sheet flexibility. Third, the gap between EBIT growth and EPS growth keeps the debate centered on financial and tax items; a clean read-through here would help unlock higher confidence in per-share earnings durability later in the year. Overall, the institutional tilt is constructive and consistent with the estimates framework: the focus is on maintaining operating spread, delivering in-line to slightly better revenue, and clarifying the non-operating bridge from EBIT to EPS to stabilize expectations for subsequent quarters.