{
  "@context": "https://frontierpicks.com/schemas/dossier.v1.json",
  "ticker": "SBS",
  "name": "COMPANHIA DE SANEAMENTO B SICO DO ESTADO DE SAO PAULO-SABESP ADS'S",
  "url": "https://frontierpicks.com/dossiers/SBS/",
  "json_url": "https://frontierpicks.com/dossiers/SBS.json",
  "status": "DORMANT",
  "current_conviction": "LOW",
  "archetype": {
    "code": "a4",
    "n": 4
  },
  "current_thesis": "Sabesp's ADS are more likely to lag the S&P 500 over three months: third-quarter net income fell 35.7% on financing costs, and the shares trade below their 200-day average. Lula's term on 5 January 2027 tests federal policy toward the privatized utility.",
  "invalidation_trigger": "A daily close above $5.63, just over the 200-day average of closes, would show the shares leading the S&P 500. Fourth-quarter 2026 net income above the year-earlier quarter would also show the shares leading.",
  "catalyst_date": "2027-01-05",
  "portfolio": null,
  "pick": null,
  "themes": [
    "emerging-markets"
  ],
  "tags": [],
  "sources": [],
  "caveats": [],
  "source_links": [
    {
      "title": "euqueroinvestir.com",
      "url": "https://euqueroinvestir.com/acoes/sabesp-tem-lucro-liquido-de-r-139-bilhao-no-3t26-queda-de-357",
      "date": "2026-11-05"
    },
    {
      "title": "SEC EDGAR",
      "url": "https://www.sec.gov/Archives/edgar/data/0001170858/000129281426005156/sbspr3q26_6k.htm",
      "date": null
    },
    {
      "title": "Sabesp (SBS) Q3 2026 Earnings: EBITDA Up 14% Amidst Massive Infrastructure Investment",
      "url": "https://www.panabee.com/news/sabesp-earnings-q3-2026",
      "date": null
    }
  ],
  "evidence": [
    {
      "claim": "Third-quarter 2026 net income was BRL 1.388 billion, down 35.7% from BRL 2.159 billion a year earlier; net margin fell to 14% from 23%.",
      "source": "Sabesp third-quarter 2026 results, via EuQueroInvestir",
      "as_of": "2026-11-05"
    },
    {
      "claim": "Third-quarter 2026 EBITDA rose 29.7% to BRL 3.982 billion, with a 39% margin versus 33% a year earlier; costs and expenses rose 2.0% to BRL 2.433 billion.",
      "source": "Sabesp third-quarter 2026 results, via EuQueroInvestir",
      "as_of": "2026-11-05"
    },
    {
      "claim": "Third-quarter 2026 net revenue rose 7.6% to BRL 10.141 billion; sanitation services revenue rose 5.6% to BRL 6.449 billion.",
      "source": "Sabesp third-quarter 2026 results, via EuQueroInvestir",
      "as_of": "2026-11-05"
    },
    {
      "claim": "The third-quarter 2026 financial result was a net expense of BRL 1.222 billion, versus a net gain of BRL 707 million a year earlier.",
      "source": "Sabesp third-quarter 2026 results, via EuQueroInvestir",
      "as_of": "2026-11-05"
    },
    {
      "claim": "Adjusted net income fell about 14% in the third quarter of 2026; the year-earlier quarter included a BRL 1.5 billion court-ordered (precatórios) gain.",
      "source": "Panabee, Sabesp third-quarter 2026 earnings",
      "as_of": "2026-11-05"
    },
    {
      "claim": "Adjusted third-quarter 2026 earnings were $0.06 per ADS, down from $0.07 a year earlier.",
      "source": "Benzinga headline",
      "as_of": "2026-11-05"
    },
    {
      "claim": "The Ibovespa fell 13.88% to 176,608 points and SBSP3 fell 20.98% in the first session after Lula's runoff win.",
      "source": "Bloomberg Línea",
      "as_of": "2026-10-26"
    }
  ],
  "view_changes": [],
  "frame": null,
  "filed_numbers": {
    "as_of": "2026-11-13",
    "sector": "Utilities",
    "financials": {
      "status": "not available",
      "reason": "no quarterly report in US GAAP with the SEC (a foreign filer reports on Form 20-F or 40-F)",
      "close_date": "2026-11-13",
      "latest_quarter": null,
      "figures": {}
    },
    "short_interest": {
      "status": "ok",
      "settlement": "2026-10-15",
      "published": "2026-10-26",
      "short_pct_of_outstanding": null,
      "days_to_cover": 1.1,
      "change_pct": 7.6
    },
    "insiders": {
      "status": "ok",
      "as_of": "2026-11-15",
      "windows": [
        {
          "days": 90,
          "status": "ok",
          "from": "2026-08-18",
          "bought_usd": 0,
          "sold_usd": 0,
          "bought_unpriced": 0,
          "sold_unpriced": 0
        },
        {
          "days": 365,
          "status": "ok",
          "from": "2025-11-16",
          "bought_usd": 0,
          "sold_usd": 0,
          "bought_unpriced": 0,
          "sold_unpriced": 4
        }
      ]
    }
  },
  "body_markdown": "## Current Thesis\n\nSabesp's American depositary shares (ADS) are more likely to lag the S&P 500 over the next three months. Third-quarter operating profit recovered, but net income fell 35.7% on financing costs, and the shares trade below both their 50-day and 200-day averages. Lula's term begins on 2027-01-05, and the fourth-quarter 2026 report, expected around March 2027, shows whether operating gains reach net income.\n\nSabesp reported the third quarter of 2026 on 2026-11-05. EBITDA (earnings before interest, taxes, depreciation and amortization) rose 29.7% to BRL 3.982 billion (Brazilian reais), and the margin widened to 39% from 33% a year earlier (Sabesp results via EuQueroInvestir, 2026-11-05). Net income fell to BRL 1.388 billion from BRL 2.159 billion, and net margin fell to 14% from 23%.\n\nThe drop came below the operating line. Costs and expenses rose only 2.0% to BRL 2.433 billion. The financial result swung from a BRL 707 million net gain in the third quarter of 2025 to a BRL 1.222 billion net expense. Panabee reports that adjusted net income fell about 14%, because the year-earlier quarter included a BRL 1.5 billion court-ordered (precatórios) gain.\n\nThe shares closed at $4.84 on 2026-11-12, after a 52-week closing low of $4.42 on 2026-11-03. The post-runoff selloff on 2026-10-26 is the backdrop: Brazil's Ibovespa index fell 13.88% to 176,608 points and Sabesp's São Paulo-listed shares (SBSP3) fell 20.98% (Bloomberg Línea).\n\n## Bull Case\n\n- **Operating costs stopped climbing.** Third-quarter 2026 costs and expenses rose 2.0% to BRL 2.433 billion, while EBITDA grew 29.7% to BRL 3.982 billion at a 39% margin (EuQueroInvestir, 2026-11-05).\n- **Revenue keeps growing.** Net revenue rose 7.6% to BRL 10.141 billion in the third quarter of 2026, and sanitation services revenue rose 5.6% to BRL 6.449 billion (EuQueroInvestir, 2026-11-05).\n- **Much of the profit drop is a comparison effect.** Panabee reports adjusted net income fell about 14% in the third quarter of 2026, against a 35.7% fall in reported net income, because the year-earlier quarter held a BRL 1.5 billion court-ordered gain (2026-11-05).\n- **The state still backs the privatization.** Governor Tarcísio de Freitas, who led the 2024 privatization, won re-election in the first round on 2026-10-04. Sabesp's concession and tariff rules are set at state level.\n- **The ADS held above its low through the report.** The close was $4.84 on 2026-11-12, against $4.56 on 2026-11-05, the day of the results, and the three-month price change is 5.2%.\n\n## Bear Case\n\n- **Profit fell for a second straight quarter.** Third-quarter 2026 net income fell 35.7% to BRL 1.388 billion, after a 31.4% fall to BRL 1.46 billion in the second quarter (Sabesp results, 2026-08-13 and 2026-11-05). Benzinga reported adjusted earnings of $0.06 per ADS, down from $0.07 a year earlier (2026-11-05).\n- **Financing costs now outweigh operating gains.** The third-quarter 2026 financial result was a BRL 1.222 billion net expense, against a BRL 707 million gain a year earlier (EuQueroInvestir, 2026-11-05).\n- **A critical federal government takes office.** Lula won the runoff with 51.76% of valid votes and his term begins on 2027-01-05 (Al Jazeera via Archyde, 2026-10-26). Sabesp was privatized in 2024 under a state government that opposed him.\n- **A weaker real cuts the dollar value.** Sabesp earns in reais. On the evening of 2026-10-25, CME dollar futures rose about 10% against the real (Rio Times).\n- **More shares are in circulation.** The EMAE merger gave holders 1.3195 Sabesp shares per EMAE share, credited on 2026-10-27 (Sabesp 6-K filings, 2026-09-16 and 2026-10-09).\n\n## Setup & Price Structure\n\nThe ADS closed at $4.84 on 2026-11-12. That is 32.4% below the 52-week intraday high of $7.16 set on 2026-04-21. The 52-week closing low is $4.42, set on 2026-11-03.\n\nCloses since the results have stayed in a narrow range, from $4.56 on 2026-11-05 to $4.98 on 2026-11-11. The 50-day average is $5.45 and the 200-day average is $5.62, both above the last close, so the shares have not recovered the levels that held before the runoff.\n\nThe three-month reference close is $4.60 on 2026-08-14, which puts the three-month gain at 5.2%. The market has priced in a federal policy risk and a weaker real: the shares sit about a third below their April high even though third-quarter EBITDA rose 29.7%.\n\nNo insider sales appear in SEC filings. The company's only recent filing on the SEC list is its 20-F annual report of 2026-04-29.\n\n## Catalyst Calendar\n\n- **2027-01-05:** Lula's fourth presidential term begins. The new government's first measures show federal policy toward privatized sanitation and Sabesp's concession.\n- **~2027-03 (est.):** Fourth-quarter 2026 results. Shows whether third-quarter operating gains reach net income once the year-earlier court-ordered gain is out of the comparison.\n\n## What Would Change Our Mind\n\nA daily close above $5.63, just over the 200-day average of closes, would show the shares leading the S&P 500. Fourth-quarter 2026 net income above the year-earlier quarter would also show the shares leading.\n\n## Correlation Notes\n\nThe ADS trades as a Brazil macro instrument more than a defensive utility. On 2026-10-26, SBSP3 fell 20.98% and Copasa fell 23.74%, alongside the Ibovespa's 13.88% drop (Bloomberg Línea). Close co-movement with the iShares MSCI Brazil ETF (EWZ), Copasa and the BRL/USD rate follows from that session. Sabesp's third-quarter financial expense ties profit to Brazilian borrowing costs, so domestic interest rate moves feed through to earnings.",
  "first_seen": "2026-11-10",
  "last_analyzed": "2026-11-13T01:15:40+00:00",
  "last_synthesized": "2026-11-13",
  "date_modified": "2026-11-13",
  "license": "Content © FrontierPicks. Cite the canonical URL."
}