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American States Water (AWR) Down 6.1% Since Last Earnings Report: Can It Rebound?

Zacks Equity Research

It has been about a month since the last earnings report for American States Water (AWR). Shares have lost about 6.1% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is American States Water due for a breakout? 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 drivers.

American States Water's Q3 Earnings Miss, Revenues Beat

American States Water Company reported third-quarter 2019 operating earnings of 69 cents per share, which missed the Zacks Consensus Estimate of 72 cents by 4.2%. The bottom line surged 11.3% from 62 cents registered in the year-ago quarter. Earnings during the quarter benefited from new rates introduced in the service territories of Golden State Water Company.

Total Revenues

Operating revenues amounted to $134.5 million, which outpaced the Zacks Consensus Estimate of $131 million by 2.7%. The top line also increased 8.3% from $124.2 million in the prior-year quarter. The upside can be primarily attributed to higher revenues in the Water and Electric segments.

Operational Update

In the quarter under review, American States Water’s total operating expenses were $91.8 million, up 1.7% year over year.

Operating income totaled $42.7 million, up 25.8% on a year-over-year basis.

Interest expenses were $6.3 million, up 5.6% year over year. Also, interest income totaled $0.8 million, up 29% year on year.

Segment Details

Earnings in the Water segment amounted to 53 cents, up from 47 cents in the prior-year quarter.

Earnings in the Electric segment came in at 3 cents, up from 2 cents in the year-ago quarter.

Earnings in the Contracted Services segment totaled 12 cents, down from 13 cents in the year-ago quarter.

Earnings in the AWR (parent) segment came in at 1 cent.

Financial Update

As of Sep 30, 2019, American States Water’s cash and cash equivalents were $10.4 million compared with $7.1 million as of Dec 31, 2018.

As of Sep 30, the company’s long-term debts were $281 million, down from $281.1 million debt as of Dec 31, 2018.


 

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 an average Growth Score of C, a grade with the same score on the momentum front. 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 D. 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.



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