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Why Is Consolidated Water (CWCO) Down 4.9% Since its Last Earnings Report?

Zacks Equity Research
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A month has gone by since the last earnings report for Consolidated Water Co. Ltd. CWCO. Shares have lost about 4.9% in that time frame.

Will the recent negative trend continue leading up to its next earnings release, or is CWCO 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 drivers.

Consolidated Water Q1 Earnings Beat, Revenues Miss

Consolidated Water Co. Ltd. reported first-quarter 2018 earnings of 19 cents per share, beating the Zacks Consensus Estimate of 18 cents by 5.56%.

Excluding one-time adjustments related to the Rosarito Project, the company reported GAAP earnings of 14 cents. The figure declined 22.2% from the prior-year quarter’s tally.

Total Revenues

In the quarter under review, Consolidated Water’s total revenues were $15.3 million, lagging the Zacks Consensus Estimate of $17.0 million by 10%. Revenues declined 2.2% from the year-ago quarter’s $15.7 million. The downside was caused by lower segment revenues except Bulk Water Operations.

Segment Details

Retail revenues in the first quarter were down 0.7% year over year to $6.43 million.

Bulk revenues were $8.2 million, up 7% from the prior-year quarter’s figure.

Manufacturing revenues were nearly $0.55 million, down 60% year over year.

Services revenues of $0.12 million were down from the year-ago quarter’s figure by 5%.

Highlights of the Release

In the first quarter, total cost of revenues fell 1.3% year over year to $8.7 million, mainly due to lower cost of revenues in Manufacturing Operations.

Consolidated Water’s gross profit in the quarter under review was $6.6 million, down 3.4% from the prior-year quarter’s level.

The company incurred general and administrative expenses of $4.7 million, down 0.6% from the prior-year quarter’s figure.

As of Mar 31, 2018, Consolidated Water’s cash and cash equivalents were $43.7 million, down from $47.2 million as of Dec 31, 2017.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month. There has been one revision higher for the current quarter compared to one lower. In the past month, the consensus estimate has shifted downward by 6.3% due to these changes.

Consolidated Water Co. Ltd. Price and Consensus

Consolidated Water Co. Ltd. Price and Consensus | Consolidated Water Co. Ltd. Quote

VGM Scores

At this time, CWCO has a subpar Growth Score of D, however its Momentum 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.

The company's stock is suitable solely for momentum based on our styles scores.

Outlook

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


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