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Growth & Income

American States Water Company (AWR - Snapshot Report) reached a 52-week high of $45.79 on November 5, thanks to a positive surprise of more than 20% in its third quarter. This marked the third straight quarter with a solid outperformance for this utility operator. The Zacks #2 Rank (Buy) stock also offers a healthy dividend yield of 3.2%.

Strong Quarter

On November 5, American States Water Company reported third quarter earnings per share of 97 cents, outpacing the year-ago figure of 83 cents by 16.9% and the Zacks Consensus Estimate of 17 cents by 21.2%.

Total revenue jumped 11.5% year over year to $133.5 million, primarily riding on strong performances from its Water and Contracted Services segments.

The company had savings of 12.7% on net interest expenses during the reported quarter thanks to a decline in short-term borrowing and higher interest income on regulatory assets.

Earnings Momentum Rising

The past week has seen 5 of 7 total estimates revised higher for 2012 and 2013 each. The Zacks Consensus Estimate for this year is up more than 6.1% in that time to $2.60 per share. Meanwhile, the Zacks Consensus Estimate for 2013 is at $2.67, marking a gain of nearly 6.4%.

Consistent Dividend

American States Water Company has been consistently paying dividends since 1931, while increasing the dividend rate each year since 1954. The company raised its quarterly dividend rate to 35.5 cents in August 2012 from the prior payout of 28 cents. The current annualized rate of $1.42 reflects a dividend yield of 3.2%.

Attractive Valuation

Shares of American States Water Company are roughly trading at 17.2 times 12 months forward earnings, an 8.5% discount to the peer group average of 18.85%. The price-to-book is at 1.93x, a 16.6% premium to the peer group average of 1.67x. The price-to-sales is at 1.84x, a 10.7% discount to the peer group average of 2.06x.

The company has a trailing 12-month ROE of 11.5% compared with the peer group average of 8.6%, a premium of 33.7%.

Following the earnings release, shares of American States Water Company have fared better than the simple moving averages for 200 days of $40.97.

Based in San Dimas, California, American States Water Company was founded in 1929. The company caters to customers in the United States and distributes water, electricity and other allied services. The market capital of this company is $0.8 billion and it has 732 employees. The company competes with California Water Service Group (CWT).


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