Pure Cycle 2026 Q1 Earnings Net Income Up 16% on Strong Land Sales

Pure Cycle (PCYO) reported robust Q1 2026 results, with net income rising 16% year-over-year to $4.57 million and revenue surging 59% to $9.13 million. The company attributed the growth to strong land development activity at its Sky Ranch project and increased tap fee revenue. Despite a 10.12% month-to-date stock decline, the results exceeded expectations for its core land and water segments.

Revenue

Driven by the Sky Ranch Master Planned Community, land development revenue totaled $6.5 million, a 132% increase from $2.8 million in Q1 2025. Water and wastewater services contributed $2.5 million, with 51 taps sold in the quarter. Single-family rentals added $0.1 million. The company highlighted a 65% completion rate for Phase 2D and plans to begin Phase 2E in 2026.

Earnings/Net Income

Earnings per share (EPS) rose 18.8% to $0.19, with net income up 16% to $4.57 million. The growth reflects higher land sales and tap fees, though EBITDA declined 12% due to reduced oil and gas water sales. The EPS increase indicates strong operational efficiency despite market headwinds.

Post-Earnings Price Action Review

The stock has fallen 10.12% month-to-date, with a 3.09% weekly decline. A post-earnings strategy of buying shares after a revenue drop quarter-over-quarter showed moderate returns (CAGR 15.86%) but underperformed the benchmark by 61 percentage points. The strategy’s Sharpe ratio of 0.51 suggests a low-risk profile, though 31.10% volatility highlights significant price swings.

CEO Commentary

Mark Harding, CEO of Pure Cycle, emphasized the company’s resilience in a challenging housing market: “Our Sky Ranch development continues to outperform expectations, with Phase 2D nearing completion and Phase 2E set to begin in 2026. The demand for entry-level homes and rental properties remains strong, supported by our partnerships with seven national homebuilders. We are also advancing infrastructure projects, including a new I-70 interchange and a charter school, to enhance long-term value. While oil and gas water sales face temporary headwinds, our focus on residential growth and recurring rental revenue positions us for sustained profitability.”

Guidance

The company expects revenue to grow in Q2 2026, driven by Phase 2D lot deliveries and increased rental unit availability. Management targets 5-7% year-over-year revenue growth for 2026, with CAPEX prioritized for infrastructure and land acquisitions. Strategic initiatives include expanding single-family rentals to 100 units by year-end and maintaining a strong balance sheet through disciplined capital allocation.

Additional News

1. Land Development Expansion: Pure Cycle announced plans to begin construction on Phase 2E of Sky Ranch in Q3 2026, adding 159 lots.

2. Rental Portfolio Growth: The company secured contracts with two new homebuilders to construct 40 single-family rental homes in Phases 2B and 2C.

3. Charter School Partnership: A charter high school is set to open in fall 2026, enhancing Sky Ranch’s appeal as an affordable, family-friendly community.