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American States Water's (AWR) Investments to Boost Portfolio
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American States Water Company’s (AWR - Free Report) systematic investments in strengthening its aging water infrastructure, sturdy utility customer base and strong credit ratings act as tailwinds.
The company has a trailing four-quarter positive earnings surprise of 5.92%, on average.
What’s Aiding the Stock?
Golden State Water Company (GSWC), a subsidiary of American States Water, invested $23.2 million in the company-funded capital projects during the first quarter of 2020 and further expects an annual investment of $115-$130 million, unless the company needs to revise its expenditures due to the COVID-19 outbreak.
The company is increasing its electricity and water utility customer base at a slow but steady pace. Further, the California Public Utilities Commission (CPUC) approved GSWC water general rate case, effective Jan 1. This hike is expected to generate an additional $10.4 million in gross margin for 2020 compared with the gross margin of 2019. CPUC’s final decision on the general rate case, issued last May, also allows an extra raise of $11.4 million in 2021.
A major portion of American States Water Company’s total revenues comes from its Water segment and it is quite essential for a water service provider to have ample water in reserve. Notably, the company’s subsidiary, American States Utility Services (ASUS), has long-term contracts with 11 military bases. During 2019, ASUS was awarded $23-million worth new construction projects, to be completed through 2020. Via these significant contract wins, the unit is expected to contribute 46-50 cents per share to the company’s earnings in 2020.
Headwinds
However, American States Water’s dependence on a single state (California) for generating a significant chunk of earnings is a huge downside. Also, the company operates in a highly-regulated environment and any changes in the existing laws and conditions could affect its business.
Zacks Rank & Price Performance
Currently, the stock carries a Zacks Rank #3 (Hold). Shares of the company have lost 7.9% in the past six months compared with the industry’s decline of 4.5%.
Essential Utilities’ long-term earnings growth(three to five years) rate is pegged at 5.91%. Also, the company has a trailing four-quarter positive earnings surprise of 3.18%, on average.
The Zacks Consensus Estimate for Fortis’ 2020 earnings has moved 1.04% north over the past 60 days. It has a trailing four-quarter positive earnings surprise of 6.28%, on average.
The long-term earnings growth rate for DTE Energy is pegged at 5.53%. The Zacks Consensus Estimate for 2020 earnings has been revised 0.31% upward over the past 60 days.
5 Stocks to Soar Past the Pandemic: In addition to the companies you learned about above, we invite you to learn about 5 cutting-edge stocks that could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of the decade.
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American States Water's (AWR) Investments to Boost Portfolio
American States Water Company’s (AWR - Free Report) systematic investments in strengthening its aging water infrastructure, sturdy utility customer base and strong credit ratings act as tailwinds.
The company has a trailing four-quarter positive earnings surprise of 5.92%, on average.
What’s Aiding the Stock?
Golden State Water Company (GSWC), a subsidiary of American States Water, invested $23.2 million in the company-funded capital projects during the first quarter of 2020 and further expects an annual investment of $115-$130 million, unless the company needs to revise its expenditures due to the COVID-19 outbreak.
The company is increasing its electricity and water utility customer base at a slow but steady pace. Further, the California Public Utilities Commission (CPUC) approved GSWC water general rate case, effective Jan 1. This hike is expected to generate an additional $10.4 million in gross margin for 2020 compared with the gross margin of 2019. CPUC’s final decision on the general rate case, issued last May, also allows an extra raise of $11.4 million in 2021.
A major portion of American States Water Company’s total revenues comes from its Water segment and it is quite essential for a water service provider to have ample water in reserve. Notably, the company’s subsidiary, American States Utility Services (ASUS), has long-term contracts with 11 military bases. During 2019, ASUS was awarded $23-million worth new construction projects, to be completed through 2020. Via these significant contract wins, the unit is expected to contribute 46-50 cents per share to the company’s earnings in 2020.
Headwinds
However, American States Water’s dependence on a single state (California) for generating a significant chunk of earnings is a huge downside. Also, the company operates in a highly-regulated environment and any changes in the existing laws and conditions could affect its business.
Zacks Rank & Price Performance
Currently, the stock carries a Zacks Rank #3 (Hold). Shares of the company have lost 7.9% in the past six months compared with the industry’s decline of 4.5%.
Key Picks
A few better-ranked stocks in the same sector ar eEssential Utilities Inc. (WTRG - Free Report) , Fortis Inc. (FTS - Free Report) and DTE Energy Company (DTE - Free Report) , all carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Essential Utilities’ long-term earnings growth(three to five years) rate is pegged at 5.91%. Also, the company has a trailing four-quarter positive earnings surprise of 3.18%, on average.
The Zacks Consensus Estimate for Fortis’ 2020 earnings has moved 1.04% north over the past 60 days. It has a trailing four-quarter positive earnings surprise of 6.28%, on average.
The long-term earnings growth rate for DTE Energy is pegged at 5.53%. The Zacks Consensus Estimate for 2020 earnings has been revised 0.31% upward over the past 60 days.
5 Stocks to Soar Past the Pandemic: In addition to the companies you learned about above, we invite you to learn about 5 cutting-edge stocks that could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of the decade.
See the 5 high-tech stocks now>>