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Will Acquisitions Boost American Water's (AWK) Q3 Earnings?

Zacks Equity Research

We expect American Water Works Company AWK to beat earnings estimates when it releases third-quarter 2019 results on Oct 30, after market close. In the last reported quarter, the company’s earnings were in line with the Zacks Consensus Estimate.

What the Zacks Model Unveils

Our proven model predicts an earnings beat for American Water this time around. A stock needs to have both a positive Earnings ESP (which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate) and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to surpass estimates. That is the case here as you will see below.

Earnings ESP: The company’s Earnings ESP is +1.17%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: American Water currently has a Zacks Rank #3.

American Water Works Company, Inc. Price and EPS Surprise

American Water Works Company, Inc. Price and EPS Surprise

American Water Works Company, Inc. price-eps-surprise | American Water Works Company, Inc. Quote

Factors at Play

American Water has been enjoying the benefits of acquisitions. This is likely to have continued in the third quarter as well. Acquisitions closed till July 2019 added 30,700 customers to its customer base, which will positively reflect on third-quarter results.

During the quarter, the company provided water and wastewater services to 14 military bases under long-term contracts, which are expected to have had a positive impact on earnings. In addition, new water rates that came into effect at the end of the second quarter and during the third quarter are anticipated to have positively impacted its third-quarter earnings.  

The Zacks Consensus Estimate for third-quarter earnings is pegged at $1.29 per share, which indicates year-over-year growth of 7.5%.

Other Stocks to Consider

In addition to American Water, here are a few other companies worth considering from the same sector that have the right combination of elements to beat on earnings in the upcoming releases.

PNM Resources Inc. PNM is scheduled to release third-quarter 2019 results on Nov 1. It has an Earnings ESP of +1.99% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Pattern Energy Group Inc. PEGI is set to release third-quarter 2019 numbers on Nov 4. It has an Earnings ESP of +2.10% and carries a Zacks Rank #2.

Eversource Energy ES is slated to release third-quarter 2019 results on Nov 5. It has an Earnings ESP of +1.06% and a Zacks Rank #2.

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