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American Water (AWK) Q4 Earnings & Revenues Miss Estimates

·4 min read

American Water Works Company AWK posted fourth-quarter 2021 operating earnings per share (EPS) of 85 cents, which missed the Zacks Consensus Estimate of 86 cents by a penny. However, the bottom line improved 6.3% from the year-ago earnings of 80 cents per share.

American Water Works reported operating EPS of $4.25 for 2021, up 8.7% from $3.91 in 2020.

Total Revenues

Total revenues of $951 million lagged the Zacks Consensus Estimate of $958 million by 0.7%. However, the top line improved 3% from the year-ago figure of $923 million.

American Water Works reported total revenues of $3,930 million for 2021, up 4.1% from $3,777 million in 2020.

American Water Works Company, Inc. Price, Consensus and EPS Surprise

American Water Works Company, Inc. Price, Consensus and EPS Surprise
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

Highlights of the Release

Total operating expenses for the fourth quarter amounted to $731 million, up 10.8% from the year-ago quarter’s $660 million, due to higher operating and maintenance expenses along with an increase in general taxes.

Operating income was $220 million, down 16.3% from the year-ago figure of $263 million. New rates effective since Jan 1, 2021 will boost annual revenues by $218 million and the pending rate case, if approved without any change, will further increase the top line by $255 million.

American Water Works continues to expand operations through acquisitions and organic means. Till Dec 31, 2021, it added 20,000 customers to the customer base through 23 closed acquisitions in six states. AWK’s pending acquisitions (as of Dec 31), when completed, will add another 73,750 customers through 26 acquisitions. American Water Works has already added 700 customers in 2022 from the pending acquisitions of the previous year.

Operating and Maintenance (O&M) efficiency for 2021 was 34.1%, reflecting an improvement of 20 basis points from 34.3% in 2020. The improvement was due to a persistent focus on operating costs and an increase in operating revenues from Regulated businesses. American Water Works targets to take its O&M Efficiency to 30% by 2026.

Segment Details

Regulated businesses’ net income in the fourth quarter of 2021 was $166 million compared with $154 million in the year-ago quarter.

Market-Based businesses’ net income in the fourth quarter of 2021 was $491 million compared with $23 million in the year-ago quarter.

Financial Highlights

Cash and cash equivalents amounted to $116 million as of Dec 31, 2021, down 78.8% from $547 million on Dec 31, 2020. Total liquidity as of Dec 31, 2021 was $1,700 million.

The total long-term debt was $10,344 million as of Dec 31, 2021, up 10.8% from $9,333 million on Dec 31, 2020.

Guidance

American Water Works affirmed 2022 earnings guidance in the range of $4.39-$4.49 per share. The Zacks Consensus Estimate for 2022 earnings of $4.45 per share is higher than $4.44, which is the midpoint of the guided range. AWK reiterated the long-term earnings growth in the range of 7-9% for the 2022-2026 period.

American Water Works plans to invest $2.5 billion in 2022 and the $13-$14 billion range in the 2022-2026 period.

Zacks Rank

American Water Works currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Upcoming Releases

American States Water Co. AWR is slated to report fourth-quarter 2021 earnings on Feb 22 after market close. The Zacks Consensus Estimate for American States Water’s fourth-quarter EPS is pegged at 50 cents.

The Zacks Consensus Estimate for AWR’s 2022 earnings implies year-over-year growth of 6.85%.

Essential Utilities Inc WTRG is slated to report fourth-quarter 2021 earnings on Feb 23 after market close. The Zacks Consensus Estimate for the fourth quarter’s EPS is pegged at 43 cents.

Essential Utilities’ long-term (three to five years) earnings growth is currently pegged at 6.08%. The Zacks Consensus Estimate for WTRG’s 2022 earnings implies year-over-year growth of 7.03%.

California Water Service Group CWT is slated to report fourth-quarter 2021 earnings on Feb 24 before market opens. The Zacks Consensus Estimate for the fourth quarter’s EPS is pegged at 20 cents.

California Water Service has a current dividend yield of 1.7%, better than the Zacks S&P 500 composite’s yield of 1.41%. The Zacks Consensus Estimate for CWT’s 2021 earnings implies year-over-year growth of 0.51%.


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