Aqua America Inc (NYSE:WTR)’s Earnings Grew 2.37%, Is It Enough?
Measuring Aqua America Inc’s (NYSE:WTR) track record of past performance is a useful exercise for investors. It enables us to understand whether or not the company has met or exceed expectations, which is an insightful signal for future performance. Today I will assess WTR’s recent performance announced on 31 December 2017 and weigh these figures against its long-term trend and industry movements. See our latest analysis for Aqua America
Commentary On WTR’s Past Performance
I use the ‘latest twelve-month’ data, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This method enables me to examine different stocks in a uniform manner using new information. For Aqua America, its most recent trailing-twelve-month earnings is US$239.74M, which, relative to the previous year’s level, has grown by a fairly subdued 2.37%. Since these figures may be relatively nearsighted, I have estimated an annualized five-year value for WTR’s earnings, which stands at US$198.57M This means that, on average, Aqua America has been able to increasingly improve its profits over the last few years as well.
What’s the driver of this growth? Let’s see if it is merely due to industry tailwinds, or if Aqua America has seen some company-specific growth. Over the last few years, Aqua America increased its bottom line faster than revenue by successfully controlling its costs. This has led to a margin expansion and profitability over time. Viewing growth from a sector-level, the US water utilities industry has been growing, albeit, at a subdued single-digit rate of 7.04% over the previous year, and 6.84% over the past five years. This means any uplift the industry is profiting from, Aqua America has not been able to reap as much as its industry peers.
What does this mean?
Though Aqua America’s past data is helpful, it is only one aspect of my investment thesis. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I recommend you continue to research Aqua America to get a better picture of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for WTR’s future growth? Take a look at our free research report of analyst consensus for WTR’s outlook.
2. Financial Health: Is WTR’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 December 2017. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
