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Why Is Consolidated Water (CWCO) Up 1.6% Since Last Earnings Report?

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A month has gone by since the last earnings report for Consolidated Water (CWCO). Shares have added about 1.6% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Consolidated 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 the most recent earnings report in order to get a better handle on the important catalysts.

Consolidated Water Q2 Earnings Beat, Revenues Miss

Consolidated Water Co. Ltd. reported second-quarter 2021 earnings of 8 cents per share, beating the Zacks Consensus Estimate by a penny. In the year-ago quarter, the company reported earnings of 13 cents per share.

Revenues

Total revenues for second-quarter 2021 came in at $16.7 million, which missed the Zacks Consensus Estimate of $18 million by 7.2%.

Further, total revenues were down 12.6% year over year. The year-over-over year decline in revenues was due to the pandemic’s impact on its retail segment and reduced orders from a major customer in the manufacturing segment.

Segment Details

Retail revenues for second-quarter 2021 decreased 4.9% year over year to $5.7 million. This reflects a 12% decrease in the volume of water sold by Cayman Water due to the closing of Grand Cayman Island to tourists in March 2020 in response to the COVID-19 pandemic.

Bulk revenues came in at $6.7 million for second-quarter 2021, up 14.1% from the prior-year figure. The increase in revenues was due to a 7% increase in the volume of water sold by CW-Bahamas.

Manufacturing revenues amounted to $0.55 million for the second quarter, down 85.4% year over year. The year-over year decline was due to a decrease in orders from Aerex’s former largest customer.

Services revenues were $3.76 million for the second quarter, up 8.3% year over year. The year-over-year improvement was due to contribution from new operating and maintenance contracts.

Other Details

General and administrative expenses for the quarter increased 3.5% from the year-ago level to $4.72 million.

Interest income for the reported quarter was $0.17 million, up 59% from the year-ago quarter.

Financial Highlights

Cash and cash equivalents as of Jun 30, 2021 were $41.2 million, down from $43.8 million on Dec 31, 2020.

Long-term debt as of Jun 30, 2021 was $0.15 million compared with $0.13 million on Dec 31, 2020.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -33.33% due to these changes.

VGM Scores

Currently, Consolidated Water has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. 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 these revisions indicates a downward shift. It's no surprise Consolidated Water has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.


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