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American States Water (AWR) Up 1.6% Since Last Earnings Report: Can It Continue?

It has been about a month since the last earnings report for American States Water (AWR). Shares have added about 1.6% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is American States Water due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

American States Water Q3 Earnings Beat, Sales Up Y/Y

American States Water Company reported third-quarter 2023 operating earnings per share (EPS) of 85 cents, which beat the Zacks Consensus Estimate of 82 cents by 3.7%. The bottom line increased 16.4% from the year-ago quarter’s 73 cents.

Total Revenues

Operating revenues came in at $151.7 million, missing the Zacks Consensus Estimate of $152 million by 0.2%. The top line increased 12.4% from $135 million in the prior-year period.

Operational Update

Operating expenses in the quarter were $99.9 million, up 5.6% from the year-ago quarter’s $94.6 million. This can be attributed to higher water and power purchases and higher maintenance expenses.

Operating income totaled $51.8 million, up 28.5% from $40.3 million recorded in the corresponding period of 2022.

Interest expenses were $11.7 million, up 60.3% year over year. Interest income totaled $2.1 million, up 228.6%.

Segmental Details

Earnings from the Water segment amounted to 72 cents per share, up 33.3% from 54 cents a year ago. This year-over-year improvement was due to rate increases.

Earnings from the Electric segment were recorded at 4 cents per share, which was flat year over year.

The same from the Contracted Services segment came in at 12 cents per share, which was consistent with the year-ago quarter’s figure.

The loss from AWR (Parent) was 2 cents per share, wider than a loss of 1 cent a year ago.

Financial Update

As of Sep 30, 2023, AWR’s cash and cash equivalents totaled $8.6 million compared with $5.9 million as of Dec 31, 2022.

As of Sep 30, 2023, the company’s long-term debt was $575.4 million compared with $446.5 million as of Dec 31, 2022.

Cash provided by operating activities for the nine months ended Sep 30, 2023, totaled $56.5 million compared with $89.9 million in the corresponding period of 2022.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.

VGM Scores

At this time, American States Water has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. However, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

American States Water has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

American States Water belongs to the Zacks Utility - Water Supply industry. Another stock from the same industry, California Water Service Group (CWT), has gained 3.7% over the past month. More than a month has passed since the company reported results for the quarter ended September 2023.

California Water Service Group reported revenues of $254.98 million in the last reported quarter, representing a year-over-year change of -4.3%. EPS of $0.60 for the same period compares with $1.03 a year ago.

For the current quarter, California Water Service Group is expected to post earnings of $1.50 per share, indicating a change of +328.6% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.

California Water Service Group has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of F.

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American States Water Company (AWR) : Free Stock Analysis Report

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