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American Water (AWK) Q4 Earnings Match Estimates, Sales Lag
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American Water Works Company (AWK - Free Report) posted fourth-quarter 2020 earnings of 80 cents per share, on par with the Zacks Consensus Estimate.
The bottom line improved 48.1% year over year on the back of strong contributions from Regulated businesses. The encouraging quarterly earnings reflect favorable impact of new rates and the benefits derived from its acquired assets.
Total Revenues
Total revenues of $923 million lagged the Zacks Consensus Estimate of $926 million by 0.3% but improved 2.3% from the year-ago figure of $902 million.
American Water Works Company, Inc. Price, Consensus and EPS Surprise
Total operating expenses for the quarter were $660 million, down 2.7% from the year-ago period.
Operating income was $263 million, 17.4% higher than the year-ago figure. New rates approved in the year added $151 million to annual revenues and the pending rate case, if approved without any change, will further increase the top line by $208 million.
The company continues to expand operations through acquisitions and organic means. In 2020, it successfully closed 23 acquisitions via adding 37,800 customers to the customer base and expanding operations in the United States. Its pending 27 acquisitions (as of Jan 31), when completed, will add another 29,800 customers to the customer base.
For the 12-month period ended Dec 31, O&M efficiency improved to 34.3% from 34.5% in the year-ago period. The improvement was due to persistent focus on operating costs and an increase in operating revenues from Regulated businesses.
Segment Details
Regulated businesses’ net income was $154 million compared with $152 million in the year-ago quarter. The company continues to expand operations through acquisitions, which will likely boost regulated earnings by 1.5-2.5% in the 2021-2025 time frame.
Market-Based businesses’ net income was $23 million against a loss of $18 million in the year-ago period.
Financial Highlights
Cash and cash equivalents amounted to $547 million as of Dec 31, 2020, up from $60 million in the corresponding period of 2019.
Total long-term debt was $9,329 million as of Dec 31, 2020, higher than $8,644 million at 2019-end.
Cash flow from operating activities for 2020 was $1,426 million compared with $1,383 million in the year-ago period. For the same period, capital expenditure was $1,822 million compared with $1,654 million in the year-ago period.
Guidance
American Water expects 2021 earnings in the range of $4.18-$4.28 per share. The company’s long-term earnings growth is expected in the range of 7-10% for the 2021-2025 period.
It aims to invest $10.3-$10.5 billion over the 2021-2025 time frame. The company has plans to invest $22-$25 billion of capital over the 2021-2030 time period.
Subject to approval of the board of directors, dividend growth for the 2021-2025 period is expected at the high end of the 7-10% range. Its O&M efficiency target remains at 30.4% for 2025.
American States Water Company (AWR - Free Report) reported fourth-quarter 2020 operating earnings of 54 cents per share, which surpassed the Zacks Consensus Estimate of 49 cents by 10.2%.
SJW Group (SJW - Free Report) reported fourth-quarter 2020 operating earnings of 46 cents per share, which surpassed the Zacks Consensus Estimate of 34 cents by 35.3%.
Essential Utilities Inc. (WTRG - Free Report) reported fourth-quarter 2020 earnings per share of 46 cents, on par with the Zacks Consensus Estimate.
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It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 77 billion devices by 2025, creating a $1.3 trillion market.
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American Water (AWK) Q4 Earnings Match Estimates, Sales Lag
American Water Works Company (AWK - Free Report) posted fourth-quarter 2020 earnings of 80 cents per share, on par with the Zacks Consensus Estimate.
The bottom line improved 48.1% year over year on the back of strong contributions from Regulated businesses. The encouraging quarterly earnings reflect favorable impact of new rates and the benefits derived from its acquired assets.
Total Revenues
Total revenues of $923 million lagged the Zacks Consensus Estimate of $926 million by 0.3% but improved 2.3% from the year-ago figure of $902 million.
American Water Works Company, Inc. Price, Consensus and EPS Surprise
American Water Works Company, Inc. price-consensus-eps-surprise-chart | American Water Works Company, Inc. Quote
Highlights of the Release
Total operating expenses for the quarter were $660 million, down 2.7% from the year-ago period.
Operating income was $263 million, 17.4% higher than the year-ago figure. New rates approved in the year added $151 million to annual revenues and the pending rate case, if approved without any change, will further increase the top line by $208 million.
The company continues to expand operations through acquisitions and organic means. In 2020, it successfully closed 23 acquisitions via adding 37,800 customers to the customer base and expanding operations in the United States. Its pending 27 acquisitions (as of Jan 31), when completed, will add another 29,800 customers to the customer base.
For the 12-month period ended Dec 31, O&M efficiency improved to 34.3% from 34.5% in the year-ago period. The improvement was due to persistent focus on operating costs and an increase in operating revenues from Regulated businesses.
Segment Details
Regulated businesses’ net income was $154 million compared with $152 million in the year-ago quarter. The company continues to expand operations through acquisitions, which will likely boost regulated earnings by 1.5-2.5% in the 2021-2025 time frame.
Market-Based businesses’ net income was $23 million against a loss of $18 million in the year-ago period.
Financial Highlights
Cash and cash equivalents amounted to $547 million as of Dec 31, 2020, up from $60 million in the corresponding period of 2019.
Total long-term debt was $9,329 million as of Dec 31, 2020, higher than $8,644 million at 2019-end.
Cash flow from operating activities for 2020 was $1,426 million compared with $1,383 million in the year-ago period. For the same period, capital expenditure was $1,822 million compared with $1,654 million in the year-ago period.
Guidance
American Water expects 2021 earnings in the range of $4.18-$4.28 per share. The company’s long-term earnings growth is expected in the range of 7-10% for the 2021-2025 period.
It aims to invest $10.3-$10.5 billion over the 2021-2025 time frame. The company has plans to invest $22-$25 billion of capital over the 2021-2030 time period.
Subject to approval of the board of directors, dividend growth for the 2021-2025 period is expected at the high end of the 7-10% range. Its O&M efficiency target remains at 30.4% for 2025.
Zacks Rank
American Water currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Releases
American States Water Company (AWR - Free Report) reported fourth-quarter 2020 operating earnings of 54 cents per share, which surpassed the Zacks Consensus Estimate of 49 cents by 10.2%.
SJW Group (SJW - Free Report) reported fourth-quarter 2020 operating earnings of 46 cents per share, which surpassed the Zacks Consensus Estimate of 34 cents by 35.3%.
Essential Utilities Inc. (WTRG - Free Report) reported fourth-quarter 2020 earnings per share of 46 cents, on par with the Zacks Consensus Estimate.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 77 billion devices by 2025, creating a $1.3 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 4 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2022.
Click here for the 4 trades >>