YORW

York Water ($YORW) Insiders Buy for 18 Months Straight - 34% Discount to Target Price

09/09/2025 21:40

York Water ($YORW) is America's oldest publicly traded water utility, established in 1816, providing water and wastewater services to over 50,000 customers across south-central Pennsylvania. With a market cap of approximately $442 million, this small-cap utility has built a stable monopolistic business structure that generates consistent cash flows over its 200+ year operating history. What should catch investors' attention is the overwhelming insider buying pattern over the past 18 months. From June 2024 through September 2025, company insiders including CEO Joseph Hand, CFO, CAO, and other officers have recorded 42 purchase transactions with zero sales. CEO Hand particularly demonstrated strong conviction with repeated large-scale purchases of $9,750 each, representing additional cash investments beyond mere dividend reinvestment. This aggressive buying behavior suggests management views current share prices as significantly undervalued. Intriguingly, there's a disconnect between this insider buying and stock price performance. Shares traded in the $40s during mid-2024 but have consistently declined through 2025, currently trading at $30.68. However, the company's fundamentals have actually improved during this period. Q2 2025 earnings of $0.35 per share beat consensus of $0.33, while revenue grew 2.4% year-over-year to $19.2 million. The company maintains a robust profit margin of 25.83%, indicating the stock decline isn't driven by operational deterioration but rather external factors. The potential game-changer is the rate increase request filed in May 2025. Based on $145 million in infrastructure investments, the company has requested an annual revenue increase of $24.2 million from the Pennsylvania Public Utility Commission. This would translate to monthly increases of $14.16 for water and $35.85 for wastewater for typical residential customers. Given the regulated utility framework, rate increases backed by justified infrastructure investments typically have high approval odds, potentially delivering permanent improvements to profitability. Financially, the company is more stable than it appears. While the debt-to-equity ratio of 93.33% seems elevated, this is typical for infrastructure-intensive utilities and manageable given stable cash flows. Operating cash flow of $31.32 million annually provides adequate debt servicing capacity. The 2.88% dividend yield also appeals to income-focused investors. Wall Street remains bullish with a 'strong buy' rating and $41 price target, implying 34% upside from current levels. Revenue projections of $78 million for 2025 and $84 million for 2026 suggest 4-8% growth rates, which could accelerate with rate approval. From an investment perspective, timing is crucial. The combination of persistent insider buying amid declining share prices creates an opportunity window. The pending rate increase serves as a clear upside catalyst with favorable risk-reward dynamics. However, investors should note limited trading volume typical of small utilities and expect moderate rather than dramatic price movements. Negative factors include high debt levels and recent negative free cash flow. The company's regional focus also limits growth potential, and rising interest rates could pressure the broader utility sector. Overall, York Water presents a compelling value investment opportunity backed by strong insider conviction and potential structural improvements, particularly attractive for dividend-focused investors with a long-term perspective.