American Water (AWK) Q4 Earnings Beat Estimates, '24 View Up
American Water Works Company AWK posted fourth-quarter 2023 operating earnings per share (EPS) of 88 cents, which surpassed the Zacks Consensus Estimate of 84 cents by 4.8%. The bottom line improved 8.6% from the year-ago quarter's earnings of 81 cents.
The company's 2023 EPS was $4.90, up 8.6% from $4.51 reported in 2022. The year-over-year improvement in earnings was due to favorable impacts of the implementation of new rates in Regulated businesses, offset somewhat by increased operating costs. The results were better than the 2023 EPS guidance of $4.72-$4.82.
Total Revenues
Total quarterly revenues of $1.03 billion surpassed the Zacks Consensus Estimate of $0.96 billion by 7.6%. The top line increased 10.8% from the year-ago figure of $0.9 billion.
American Water’s 2023 revenues of $4.2 billion were up 11.7% from $3.8 billion in 2022.
American Water Works Company, Inc. Price, Consensus and EPS Surprise
American Water Works Company, Inc. price-consensus-eps-surprise-chart | American Water Works Company, Inc. Quote
Segmental Details
Regulated businesses’ revenues in 2023 were $3.9 billion, up 11.8% year over year. The uptick was due to completed general rate cases and infrastructure proceedings for the recovery of incremental capital and acquisition investments.
Other revenues in 2023 were $314 million compared with $287 million in the previous year.
Highlights of the Release
Total operating expenses for the fourth quarter were $733 million, up 9.4% from the year-ago quarter’s $670 million due to an increase in operating and maintenance expenses.
The operating income was $299 million, up 14.6% from the year-ago figure of $261 million. The actual operating income was better than our model’s projection of $285 million.
American Water continues to expand operations through acquisitions and organic means. Through 23 closed acquisitions in eight states, it added 18,100 customers to its base as of Dec 31, 2023. AWK’s 25 pending acquisitions (as of Dec 31), when completed, will add another 88,1300 customers.
In 2023, the company has been authorized additional annualized revenues of $359 million from rate increases. Further, $31 million of additional annualized revenues from infrastructure charges have been authorized and are effective since 2023-end. Currently, the rate request pending amounts to $670 million.
Financial Highlights
Cash and cash equivalents amounted to $330 million as of Dec 31, 2023, compared with $85 million as of Dec 31, 2022.
The total long-term debt was $11.7 billion as of Dec 31, 2023, up 7.2% from $10.9 billion as of Dec 31, 2022.
During 2023, cash flow from operating activities was $1.87 billion compared with $1.1 billion a year ago.
Guidance
American Water raised 2024 EPS guidance to a range of $5.20-$5.30 from the previous expectation of $5.10-$5.20. The Zacks Consensus Estimate of $5.17 is lower than $5.25, the midpoint of the company’s guided range. AWK reiterated long-term earnings and dividend growth in the range of 7-9%.
The company plans to invest nearly $3.1 billion across its footprint in 2024. Further, it intends to invest in the range of $16-$17 billion and $34-$38 billion in the 2024-2028 and 2024-2033 periods, respectively.
Zacks Rank
American Water currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Upcoming Releases
American States Water Co. AWR is set to report fourth-quarter 2023 earnings on Feb 21, after market close. The Zacks Consensus Estimate for American States Water’s fourth-quarter EPS is pinned at 53 cents, suggesting growth of 6% from the year-ago levels.
Essential Utilities Inc. WTRG is set to report fourth-quarter 2023 earnings on Feb 22. The Zacks Consensus Estimate for Essential Utilities’ fourth-quarter EPS is pegged at 49 cents, implying growth of 11.4% from the prior-year figures.
California Water Service Group CWT is scheduled to report fourth-quarter 2023 earnings on Feb 29. The Zacks Consensus Estimate for California Water Service’s fourth-quarter EPS is pegged at $1.50, suggesting growth of 328.6% from the year-ago actuals.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
American Water Works Company, Inc. (AWK) : Free Stock Analysis Report
California Water Service Group (CWT) : Free Stock Analysis Report
American States Water Company (AWR) : Free Stock Analysis Report
Essential Utilities Inc. (WTRG) : Free Stock Analysis Report
