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Why Is American Water Works (AWK) Down 0.7% Since Last Earnings Report?
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It has been about a month since the last earnings report for American Water Works (AWK - Free Report) . Shares have lost about 0.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is American Water Works 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 catalysts.
American Water's Q1 Earnings Match Estimates
American Water Works Company posted first-quarter 2021 earnings of 73 cents per share, on par with the Zacks Consensus Estimate.
The bottom line improved 8.9% year over year on the back of strong contributions from Regulated businesses. The encouraging quarterly earnings reflect favorable impact of infrastructure investments, acquisitions and organic growth.
Total Revenues
Total revenues of $888 million surpassed the Zacks Consensus Estimate of $878 million by 1.4% and improved 5.2% from the year-ago figure of $844 million.
Highlights of the Release
Total operating expenses for the quarter were $659 million, up 8.9% from the year-ago period.
Operating income was $229 million, 4.2% lower than the year-ago figure. New rates effective since Jan 1, 2021 will add $123 million to annual revenues. The pending rate case, if approved without any change, will further increase the top line by $61 million.
The company continues to expand operations through acquisitions and organic means. Till May 1, 2021, it successfully closed five acquisitions, which added 900 customers to the customer base and expanded operations in the United States. Its pending 32 acquisitions (as of May 1), when completed, will add another 86,000 customers to the customer base.
For the 12-month period ended Mar 31, O&M efficiency improved to 34.1% 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 $135 million compared with $123 million in the year-ago quarter. The company continues to expand operations through acquisitions and organic initiatives.
Market-Based businesses’ net income was $17 million compared with $22 million in the year-ago period.
Financial Highlights
Cash and cash equivalents amounted to $69 million as of Mar 31, 2021, down from $547 million on Dec 31, 2020.
Total long-term debt was $9,325 million as of Mar 31, 2021, marginally lower than $9,329 million at 2020-end.
Cash flow from operating activities for first-quarter 2021 was $179 million compared with $180 million in the year-ago period. For the same period, capital expenditure was $342 million compared with $408 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 $10.4 billion over the 2021-2025 time frame. Its O&M efficiency target remains at 30.4% for 2025.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision flatlined during the past month.
VGM Scores
Currently, American Water Works has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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.
Outlook
American Water Works has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is American Water Works (AWK) Down 0.7% Since Last Earnings Report?
It has been about a month since the last earnings report for American Water Works (AWK - Free Report) . Shares have lost about 0.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is American Water Works 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 catalysts.
American Water's Q1 Earnings Match Estimates
American Water Works Company posted first-quarter 2021 earnings of 73 cents per share, on par with the Zacks Consensus Estimate.
The bottom line improved 8.9% year over year on the back of strong contributions from Regulated businesses. The encouraging quarterly earnings reflect favorable impact of infrastructure investments, acquisitions and organic growth.
Total Revenues
Total revenues of $888 million surpassed the Zacks Consensus Estimate of $878 million by 1.4% and improved 5.2% from the year-ago figure of $844 million.
Highlights of the Release
Total operating expenses for the quarter were $659 million, up 8.9% from the year-ago period.
Operating income was $229 million, 4.2% lower than the year-ago figure. New rates effective since Jan 1, 2021 will add $123 million to annual revenues. The pending rate case, if approved without any change, will further increase the top line by $61 million.
The company continues to expand operations through acquisitions and organic means. Till May 1, 2021, it successfully closed five acquisitions, which added 900 customers to the customer base and expanded operations in the United States. Its pending 32 acquisitions (as of May 1), when completed, will add another 86,000 customers to the customer base.
For the 12-month period ended Mar 31, O&M efficiency improved to 34.1% 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 $135 million compared with $123 million in the year-ago quarter. The company continues to expand operations through acquisitions and organic initiatives.
Market-Based businesses’ net income was $17 million compared with $22 million in the year-ago period.
Financial Highlights
Cash and cash equivalents amounted to $69 million as of Mar 31, 2021, down from $547 million on Dec 31, 2020.
Total long-term debt was $9,325 million as of Mar 31, 2021, marginally lower than $9,329 million at 2020-end.
Cash flow from operating activities for first-quarter 2021 was $179 million compared with $180 million in the year-ago period. For the same period, capital expenditure was $342 million compared with $408 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 $10.4 billion over the 2021-2025 time frame. Its O&M efficiency target remains at 30.4% for 2025.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision flatlined during the past month.
VGM Scores
Currently, American Water Works has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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.
Outlook
American Water Works has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.