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Why Is American States Water (AWR) Up 3.8% Since Last Earnings Report?

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A month has gone by since the last earnings report for American States Water (AWR). Shares have added about 3.8% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is American States Water 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.

American States Water Q3 Earnings Lag, Revenues Rise Y/Y

American States Water reported third-quarter 2021 operating earnings of 76 cents per share, which missed the Zacks Consensus Estimate of 77 cents by 1.3%. The bottom line, however, improved 5.6% from the year-ago quarter’s earnings of 72 cents per share.

Total Revenues

Operating revenues of $136.8 million missed the Zacks Consensus Estimate of $140 million by 2.3%. However, the top line improved 2.3% from $133.7 million in the prior-year quarter.

Operational Update

In the quarter under review, American States Water’s total operating expenses were $94 million, up 0.1% year over year. This can primarily be attributed to an increase in water purchased, power purchased for pumping and power purchased for resale expenses.

Operating income was $42.8 million, up 7.5% year over year.

Interest expenses were $5.6 million, down 9.9% year over year. Interest income was $0.3 million, up 5.4% from the prior-year quarter’s level.

Segment Details

Earnings in the Water segment were 62 cents per share, up from 57 cents in the prior-year quarter. This upside was mainly driven by a higher water gross margin, resulting from new rates authorized by the California Public Utilities Commission (CPUC).

Earnings in the Electric segment of 4 cents per share were on par with the year-ago quarter’s reading as higher electric’s operating revenues were offset by increased operating expenses.

Earnings in the Contracted Services segment were 11 cents per share, up from 10 cents in the year-ago quarter owing to a decline in the overall operating expenses.

Financial Update

As of Sep 30, 2021, American States Water’s cash and cash equivalents were $7.1 million compared with $36.7 million as of Dec 31, 2020.

As of Sep 30, 2021, the company’s long-term debt was $412.1 million, down from $440.3 million as of Dec 31, 2020.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.

VGM Scores

Currently, American States Water has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

American States Water has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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