American States Water Company (AWR) announced that its board of directors has sanctioned a new share repurchase program, which will allow the company to repurchase up to 1.25 million shares, equivalent to 3.2% of the company’s outstanding common stock.
American States Water plans to begin the share repurchase process from May 2014 and expects to complete it by June 30, 2016.
At the end of 2013, the company’s equity to total capitalization ratio stood at 60.2%. In Sep, 2013 American States Water announced a two-for-one stock split, whereby, the company’s outstanding number of shares increased from 19.3 million to approximately 38.6 million. American States Water’s buyback initiative will help in increasing shareholder value by reducing the total outstanding shares of the company.
The cash position of the company improved 62.6% to $38.2 million as of Dec 31, 2013 from $23.5 million as of Dec 31, 2012. The improved cash position will allow the company in executing the buyback plan efficiently.
The company’s earnings surpassed the Zacks Consensus Estimate in the last 4 quarters, with an average surprise of 27.26%. In fourth quarter, earnings of 30 cents per share surpassed the Zacks Consensus Estimate of 19 cents by 57.9%, rising 11.1% year over year, primarily due to an improvement in margin under the Water segment as a result of positive impact from the water general rate case, and lower total operating expenses.
American States Water has consistently returned wealth to its shareholders through common dividends. During 2013, the company paid nearly $29.4 million in common stock dividend, which accounts for almost 47% of the net income reported in the same year.
American States Water currently has a Zacks Rank #1 (Strong Buy). Other stocks in the Water Utility industry include Middlesex Water Company (MSEX), Companhia de Saneamento Basico do Estado de Sao Paulo (SBS) and Connecticut Water Service Inc. (CTWS). While Companhia de Saneamento and Middlesex Water hold a Zacks Rank #1 (Strong Buy), Connecticut Water Service carries a Zacks Rank #2 (Buy).