Why Is American States Water (AWR) Down 7% Since Last Earnings Report?
It has been about a month since the last earnings report for American States Water (AWR). Shares have lost about 7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is American States Water due for a breakout? 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 catalysts.
American States Water Q2 Earnings & Sales Beat Estimates
American States Water Company reported second-quarter 2023 operating earnings per share (EPS) of 83 cents, which beat the Zacks Consensus Estimate of 79 cents by 5.1%. The bottom line increased 29.7% from the year-ago quarter’s 64 cents.
Total Revenues
Operating revenues came in at $157.4 million, beating the Zacks Consensus Estimate of $128 million by 23%. The top line increased 28.4% from $122.6 million in the prior-year period.
Operational Update
Operating expenses for the quarter were $98.5 million, up 11.5% from the year-ago quarter’s $88.3 million. This can be attributed to higher administrative and general expenses.
Operating income totaled $58.9 million, up 71.8% from $34.3 million recorded in the corresponding period of 2022.
Interest expenses were $10.7 million, up 70% year over year. Interest income totaled $1.8 million, up 312.6% from the prior-year quarter’s level.
Segmental Details
Earnings from the Water segment amounted to 73 cents per share, up 69.8% from 43 cents a year ago. This was due to second-year rate increases related to the quarter.
Earnings from the Electric segment were recorded at 3 cents per share, which declined 25% from the year-ago quarter’s reading.
The same from the Contracted Services segment came in at 12 cents per share, up 20% from 10 cents in the year-ago quarter. This was due to an increase in construction activity and an increase in management fee revenues resulting from the resolution of various economic price adjustments.
Financial Update
As of Jun 30, 2023, AWR’s cash and cash equivalents totaled $1 million compared with $5.9 million as of Dec 31, 2022.
As of Jun 30, 2023, the company’s long-term debt was $576.4 million compared with $446.5 million as of Dec 31, 2022.
Cash provided by operating activities for the six months ended Jun 30, 2023 totaled $17.8 million compared with $56.9 million in the corresponding period of 2022.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
At this time, American States Water has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Charting a somewhat similar path, 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 broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, American States Water has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
American States Water Company (AWR) : Free Stock Analysis Report
