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Reasons to Add American States Water (AWR) to Your Portfolio

Zacks Equity Research

American States Water Company AWR is poised for growth on an expanding customer base, significant water rights in its service territories, regular dividend hikes and strong credit rating.

Estimates for the companyhave been revised upward over the past 30 days, reflecting analysts’ confidence in the stock. The Zacks Consensus Estimate for 2019 and 2020 earnings per share has moved up 2.5% and 0.5% to $2.04 and $2.13, respectively.

Let’s focus on the factors that make American States Water an attractive stock at the moment.

Zacks Rank & Surprise History

The company currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

American States Water’s average four-quarter positive earnings surprise is 5.91%.

Price Appreciation & Long-Term Growth

In the past three months, the stock has gained 17%, outperforming its industry’s growth of 14%.

The company’s long-term (three to five years) earnings growth is pegged at 8%.  

Capital Investments

The company continues to invested to upgrade and improve its infrastructure. Golden State Water Company (GSWC) invested $70.7 million in company-funded capital projects during the first six months of 2019 and expects to invest $115-$125 million in 2019.

Long-Term Defense Contracts

The company’s subsidiary, American States Utility Services (ASUS) is well-equipped to win fresh awards from the military establishments. Long-term defense contracts actually provide stability to earnings and offer ample visibility into the financial performance of utilities. ASUS has long-term contracts with 11 military bases after it received another long-term service contract from Fort Riley, Kansas last September. Most of the contracts have a duration of more than 50 years. The company continues to benefit from increased management fees and construction activity at several other bases.

Steady Dividend Payment

American States Water has been a steady dividend payer. In fact, the company has paid dividends to shareholders every year since 1931 and has increased the same in each of the last 65 calendar years. Its objective is to raise the dividend by 7% compounded annual growth rate over the long term.

Other Key Picks

Other top-ranked stocks in the same sector include The York Water Company YORW, Alliant Energy Corporation LNT and IDACORP, Inc. IDA. All the stocks carry a Zacks Rank #2.

Notably, 2019 earnings estimates for The York Water, Alliant Energy and IDACORP have moved up 0.4%, 0.2% and 1%, respectively, over the past 60 days to $2.25, $4.47 and $1.12 per share, respectively. All the stocks have outperformed the industry in a year’s time.

The York Water and IDACORP have average four-quarter positive earnings surprise of 0.77% and 7.79%, respectively. Alliant Energy’s long-term (three to five years) earnings growth rate is pegged at 5.50%.

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Alliant Energy Corporation (LNT) : Free Stock Analysis Report
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American States Water Company (AWR) : Free Stock Analysis Report
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