Aris Water Solutions Inc. – Ticker: ARIS

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1. Executive Summary

  • Company Name: Aris Water Solutions Inc.
  • Ticker: ARIS
  • Sector: Environmental Infrastructure / Water Management
  • Exchange: NYSE
  • Investment Rating: Buy – Strong financial performance and strategic positioning in sustainable water management support a positive outlook.

2. Company Overview

  • Business Model: Aris Water Solutions provides full-cycle water handling and recycling solutions, focusing on produced water management in the Permian Basin.
  • Industry Position: A leading environmental infrastructure company with integrated pipelines and infrastructure for water recycling and supply.
  • Key Services: Produced water handling, water recycling, and supply solutions.
  • Leadership: Led by CEO Amanda M. Brock, with a focus on sustainability and operational efficiency.

3. Financial Analysis

  • Revenue Growth: Q1 2025 revenue was $120.3 million, a 13.91% increase year-over-year.
  • Profitability:
    • Net Income: $16 million in Q1 2025.
    • Adjusted EBITDA: $56.5 million in Q1 2025, up 6.5% from Q1 2024.
  • EPS: Diluted EPS of $0.25 in Q1 2025.
  • Balance Sheet: As of March 31, 2025, the company had net debt of approximately $422 million, with $33 million in cash and $292 million available under its revolving credit facility.
  • Cash Flow: Net cash used in operating activities was $6.8 million in Q1 2025, primarily due to changes in working capital. 

4. Stock Performance

  • Current Price: $23.85 as of May 28, 2025.
  • 52-Week Range: $13.34 – $33.95.
  • Market Cap: Approximately $778.5 million.
  • Beta: 1.91, indicating higher volatility compared to the market.
  • Dividend: Quarterly dividend of $0.14 per share. 

5. Valuation Analysis

  • P/E Ratio: Approximately 9.5, suggesting a reasonable valuation.
  • Analyst Price Targets:
    • Average: $26.00, indicating a potential upside of ~9%.
    • Range: $22.00 – $30.00. 

6. Industry & Market Analysis

  • Industry Trends: Increasing emphasis on sustainable water management in the energy sector.
  • Market Share: Strong presence in the Permian Basin, serving major operators.
  • Macroeconomic Factors: Regulatory focus on environmental sustainability supports demand for water recycling services.

7. Risk Analysis

  • Market Risk: Exposure to oil and gas industry cycles.
  • Financial Risk: Moderate leverage with a net debt of $422 million.
  • Regulatory Risk: Potential changes in environmental regulations.
  • Geopolitical Risk: Limited, as operations are primarily domestic.

8. Growth Catalysts

  • Operational Expansion: Increased volumes in produced water handling and recycling.
  • Strategic Partnerships: Long-term agreements with major energy operators, including Chevron.
  • Technological Advancements: Investments in water treatment technologies to enhance service offerings.

9. Analyst Sentiment

  • Consensus Rating: Buy.
  • Recent Analyst Actions:
    • Goldman Sachs: Price target of $30.00.
    • Wells Fargo: Price target of $11.00, maintaining Equalweight rating. 

10. Conclusion

Aris Water Solutions Inc. demonstrates strong financial performance and strategic positioning in the sustainable water management sector. With solid revenue growth, profitability, and partnerships with major energy operators, the company is well-positioned for continued success. The stock offers a reasonable valuation with potential upside, making it an attractive option for investors seeking exposure to environmental infrastructure.

11. Appendix

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