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Monday, 02/11/2008 6:04:45 PM

Monday, February 11, 2008 6:04:45 PM

Post# of 8
RECOMMENDATION

We rate SJW CORP (SJW) a BUY. This is driven by multiple strengths, which we believe should have a
greater impact than any weaknesses, and should give investors a better performance opportunity than most
stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth,
notable return on equity and largely solid financial position with reasonable debt levels by most measures.
We feel these strengths outweigh the fact that the company has had lackluster performance in the stock
itself.

HIGHLIGHTS

The revenue growth significantly trails the industry average of 60.0%. Since the same quarter one year prior,
revenues slightly increased by 2.7%. This growth in revenue does not appear to have trickled down to the
company's bottom line, displayed by a decline in earnings per share.
The return on equity has improved slightly when compared to the same quarter one year prior. This can be
construed as a modest strength in the organization. Compared to other companies in the Water Utilities
industry and the overall market on the basis of return on equity, SJW CORP has outperformed in comparison
with the industry average, but has underperformed when compared to that of the S&P 500.
SJW's debt-to-equity ratio of 0.86 is somewhat low overall, but it is high when compared to the industry
average, implying that the management of the debt levels should be evaluated further. Regardless of the
somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.87 is weak.
SJW CORP's earnings per share declined by 10.4% in the most recent quarter compared to the same quarter
a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a
decline in earnings in the coming year. During the past fiscal year, SJW CORP increased its bottom line by
earning $2.09 versus $1.19 in the prior year. For the next year, the market is expecting a contraction of 47.8%
in earnings ($1.09 versus $2.09).
The company, on the basis of change in net income from the same quarter one year ago, has significantly
underperformed compared to the Water Utilities industry average, but is greater than that of the S&P 500. The
net income has decreased by 9.6% when compared to the same quarter one year ago, dropping from $8.86
million to $8.01 million.


Regards,
frenchee

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