Investors in American Water Works Company, Inc. (NYSE:AWK) had a good week, as its shares rose 7.1% to close at US$161 following the release of its quarterly results. American Water Works Company missed revenue estimates by 2.7%, with sales of US$1.1b, although statutory earnings per share (EPS) of US$1.46 beat expectations, coming in 5.6% ahead of analyst estimates. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Following the latest results, American Water Works Company's twelve analysts are now forecasting revenues of US$3.99b in 2021. This would be a credible 6.2% improvement in sales compared to the last 12 months. Per-share earnings are expected to grow 15% to US$4.22. Before this earnings report, the analysts had been forecasting revenues of US$3.99b and earnings per share (EPS) of US$4.21 in 2021. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
The analysts reconfirmed their price target of US$146, showing that the business is executing well and in line with expectations. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on American Water Works Company, with the most bullish analyst valuing it at US$170 and the most bearish at US$109 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. The analysts are definitely expecting American Water Works Company's growth to accelerate, with the forecast 6.2% growth ranking favourably alongside historical growth of 3.2% per annum over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 7.0% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that American Water Works Company is expected to grow at about the same rate as the wider industry.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall industry. The consensus price target held steady at US$146, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on American Water Works Company. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for American Water Works Company going out to 2024, and you can see them free on our platform here..
Before you take the next step you should know about the 2 warning signs for American Water Works Company (1 is a bit concerning!) that we have uncovered.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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