Citi Previews Aris Water Solutions Inc (ARIS) Earnings: Believes Excess Cash Flow Could Lead to 40% Dividend Increase

Citi analyst Spiro Dounis reiterated a Buy rating and $14.00 price target on Aris Water Solutions Inc (NYSE: ARIS).

The analyst comments "

We see the potential for ARIS to recommence dividend growth as soon as this quarter; mgmt pointed to a potential dividend increase or buybacks after reaching positive ’24 FCFaD. We estimate ARIS can increase the dividend by over 40% while still leaving excess cash flow for potential growth opportunities. Buybacks are less likely after the recent stock price performance and the low float, in our view. On earnings, we expect 1Q24 EBITDA of $47mm, above the Street mean of $45mm and at the high end of the $43-$47mm guided range. Higher than expected crude prices drives the outperformance this quarter. Water sourcing seasonality and a pull forward of activity to 4Q23 drives a ~30% sequential decline in water solutions volumes – consistent with guidance. That said, we expect volumes to rebound as producer activity accelerates through the year. System electrification connections continued in 1Q24 – driving further cost savings and margin expansion."

For an analyst ratings summary and ratings history on Aris Water Solutions Inc click here. For more ratings news on Aris Water Solutions Inc click here.

Shares of Aris Water Solutions Inc closed at $14.12 yesterday.

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