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Aqua America (WTR) Up 1.7% Since Last Earnings Report: Can It Continue?

Zacks Equity Research
Intel (INTC) closed at $50.12 in the latest trading session, marking a +0.4% move from the prior day.

A month has gone by since the last earnings report for Aqua America (WTR). Shares have added about 1.7% in that time frame, underperforming 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 the most recent earnings report in order to get a better handle on the important catalysts.

Aqua America Q4 Earnings and Revenues Miss Estimates

Aqua America Inc.  reported fourth-quarter 2018 earnings per share of 31 cents, lagging the Zacks Consensus Estimate by a penny.

Nonetheless, the bottom line improved year over year, which can be attributed to higher earnings from rate cases, regulated growth and lower expenses.

Total Revenues

Quarterly revenues amounted to $205.7 million, which missed the Zacks Consensus Estimate of $213 million by 3.4%. However, the reported revenues were up 1.3% year over year. The upside can be attributed to rate activity, regulated growth, among others, marginally offset by lower consumption.

Highlights of the Release

The company continues to expand its operation through acquisitions. Aqua America added more than 13,700 customers during 2018 through completion of six municipal water and wastewater systems acquisitions. The company currently has eight pending water and wastewater acquisitions under agreement, expected to close in 2019, totaling nearly 20,000 new customer connections.

Fourth-quarter operation and maintenance expenses increased 18.4% year over year to $92.4 million.

Interest expenses also increased 13.8% to $26.4 million from $23.2 million in the year-ago quarter.

Financial Highlights

Current assets were $147.1 million as of Dec 31, 2018, up from $131.2 million in the corresponding period of 2017.

Long-term debt was $2,398.5 million as of Dec 31, 2018, higher than $2,007.7 million on Dec 31, 2017.

Guidance

Aqua America expects adjusted net earnings in 2019 within $1.45-$1.50 per share.

It expects customer base to expand 2-3% in 2019. The company plans to invest $550 million in 2019. This is part of the 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. The consensus estimate has shifted 5.35% due to these changes.

VGM Scores

At this time, Aqua America has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% 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 these revisions 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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