Global Water Resources heads into its third-quarter report with an unusual split between what the business is doing and what the earnings line is likely to show. Last quarter, management sounded more confident than it had in a year. It pointed to re-accelerating customer growth, a rebound in local building permits and a new stream of recognized connection-fee revenue. Yet the Street expects earnings per share to fall sharply from a year ago. The report due before the open on November 5 will show whether that optimism is translating into durable operating momentum or whether heavier depreciation and financing costs keep overwhelming it.

Consensus calls for EPS of $0.05 on revenue of about $16.1 million. That would be a 28.6% decline in earnings against modest revenue growth of 3.7%. The company has not issued formal guidance, so the bar is set entirely by analysts. The revenue estimate looks restrained next to the second quarter, when regulated revenue excluding connection fees grew nearly 10% from a year earlier. Part of the explanation is that the second quarter's $17.8 million total was inflated by $2.1 million of deferred ICFA revenue. That revenue was recognized when the first GW Hassayampa wastewater plant went into service. A clean comparison therefore depends on how much, if any, additional ICFA revenue appears this quarter and whether underlying regulated revenue holds its high-single-digit pace.

The most important operating figure may be connection growth. Management said organic growth climbed back above 3% in the three months before its last call, up from 2.6% the quarter before and under 2% earlier in the fiscal year. Maricopa permits also flipped to a 5.7% gain from a double-digit decline. Management went further, suggesting growth could actually accelerate. It cited the State Route 347 widening and a record year for regional economic development. Another quarter of growth near or above 3%, with active connections rising faster than the 5.8% pace reported last time, would validate that thesis. A slip back toward 2% would suggest the spring improvement was noise. That risk is real, because broader Phoenix single-family permits were still running below year-ago levels.

The earnings line is where the challenge lies. Depreciation from the 2025 capital spending peak added $2.0 million to expenses through the first half. Medical and purchased-power costs are rising, and other expense roughly doubled year over year as interest costs climbed and interest income fell. General and administrative spending held flat last quarter. Keeping that discipline intact is one of the few levers management directly controls while it waits for rate relief. On that front, the Santa Cruz settlement now points to roughly $1.9 million in added revenue. That is down from earlier terms and well below the $4.3 million originally sought. New rates were expected around November 1, after this quarter closed. Confirmation of a final order would matter more than any third-quarter number. Any further shrinkage or delay would compound the setback of the Palo Verde case, which has been pushed to a 2027 filing.

Sentiment has soured noticeably. It swung from mildly bullish before the last report to firmly bearish now. The stock has nonetheless edged up 1.6% since the last release, slightly ahead of a softer S&P 500. That modest gain masks a round trip: shares spiked as high as $9.58 after the last report and have since retreated to $7.83. That leaves them near the bottom of the post-earnings range and just under the 200-day moving average. The market appears to have priced in skepticism rather than enthusiasm.

The central question is whether customer growth is strong enough to carry the story until rate relief arrives. If connections keep accelerating, costs stay contained and the Santa Cruz rates are locked in, the earnings dip looks like a temporary depreciation hangover. If growth stalls or the rate timeline slips again, that bearish mood may prove justified.