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Aqua America (WTR) Up 1.2% Since Last Earnings Report: Can It Continue?

Zacks Equity Research

It has been about a month since the last earnings report for Aqua America (WTR). Shares have added about 1.2% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Aqua America due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Aqua America's Q1 Earnings Miss, Revenues Increase Y/Y

Aqua America Inc. reported first-quarter 2019 earnings per share of 28 cents, lagging the Zacks Consensus Estimate by 6.7%.

The bottom line also fell 3.5% year over year, primarily due to higher expenditure incurred during the reported quarter.

Total Revenues

Quarterly revenues amounted to $201.11 million, which missed the Zacks Consensus Estimate of $204 million by 1.4%. However, the reported revenues were up 3.5% year over year. The upside can be attributed to rate activity, organic growth and contribution from its acquired assets.

Highlights of the Release

The company continues to expand its operation through acquisitions. Aqua America added nearly 572 customer connections in first-quarter 2019 through the completion of three water and wastewater service providers.

First-quarter total cost and expenses increased nearly 7% year over year to $133.7 million.

Interest expenses also increased 18.7% to $27.9 million from $23.5 million in the year-ago quarter.

Financial Highlights

Current assets were $143.8 million as of Mar 31, 2019 compared with $147.1 million on Dec 31, 2018.

Long-term debt was $2,462.9 million as of Mar 31, 2019, higher than $2,398.5 million on Dec 31, 2018.

During the quarter, the company invested $133.8 million to strengthen its water and wastewater infrastructure.

Guidance

Aqua America reiterated its 2019 adjusted net earnings guidance within $1.45-$1.50 per share.

It expects customer base to expand 2-3% in 2019. The company plans to invest $550 million during the year. This is part of its investment plan of nearly $1.4 billion through 2021.
 

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended upward during the past month.

VGM Scores

Currently, Aqua America has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. 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 F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. Notably, Aqua America has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.



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