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Why Is American Water Works (AWK) Up 6.3% 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 added about 6.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is American Water Works due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
American Water Q4 Earnings & Revenues Miss Estimates
American Water Works Company posted fourth-quarter 2021 operating earnings per share (EPS) of 85 cents, which missed the Zacks Consensus Estimate of 86 cents by a penny. However, the bottom line improved 6.3% from the year-ago earnings of 80 cents per share.
American Water Works reported operating EPS of $4.25 for 2021, up 8.7% from $3.91 in 2020.
Total Revenues
Total revenues of $951 million lagged the Zacks Consensus Estimate of $958 million by 0.7%. However, the top line improved 3% from the year-ago figure of $923 million.
American Water Works reported total revenues of $3,930 million for 2021, up 4.1% from $3,777 million in 2020.
Highlights of the Release
Total operating expenses for the fourth quarter amounted to $731 million, up 10.8% from the year-ago quarter’s $660 million, due to higher operating and maintenance expenses along with an increase in general taxes.
Operating income was $220 million, down 16.3% from the year-ago figure of $263 million. New rates effective since Jan 1, 2021 will boost annual revenues by $218 million and the pending rate case, if approved without any change, will further increase the top line by $255 million.
American Water Works continues to expand operations through acquisitions and organic means. Till Dec 31, 2021, it added 20,000 customers to the customer base through 23 closed acquisitions in six states. AWK’s pending acquisitions (as of Dec 31), when completed, will add another 73,750 customers through 26 acquisitions. American Water Works has already added 700 customers in 2022 from the pending acquisitions of the previous year.
Operating and Maintenance (O&M) efficiency for 2021 was 34.1%, reflecting an improvement of 20 basis points from 34.3% in 2020. The improvement was due to a persistent focus on operating costs and an increase in operating revenues from Regulated businesses. American Water Works targets to take its O&M Efficiency to 30% by 2026.
Segment Details
Regulated businesses’ net income in the fourth quarter of 2021 was $166 million compared with $154 million in the year-ago quarter.
Market-Based businesses’ net income in the fourth quarter of 2021 was $491 million compared with $23 million in the year-ago quarter.
Financial Highlights
Cash and cash equivalents amounted to $116 million as of Dec 31, 2021, down 78.8% from $547 million on Dec 31, 2020. Total liquidity as of Dec 31, 2021 was $1,700 million.
The total long-term debt was $10,344 million as of Dec 31, 2021, up 10.8% from $9,333 million on Dec 31, 2020.
Guidance
American Water Works affirmed 2022 earnings guidance in the range of $4.39-$4.49 per share. The Zacks Consensus Estimate for 2022 earnings of $4.45 per share is higher than $4.44, which is the midpoint of the guided range. AWK reiterated the long-term earnings growth in the range of 7-9% for the 2022-2026 period.
American Water Works plans to invest $2.5 billion in 2022 and the $13-$14 billion range in the 2022-2026 period.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
VGM Scores
At this time, American Water Works has a subpar Growth Score of D, a grade with the same score on the momentum front. Charting a somewhat similar path, 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
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, 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) Up 6.3% Since Last Earnings Report?
It has been about a month since the last earnings report for American Water Works (AWK - Free Report) . Shares have added about 6.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is American Water Works due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
American Water Q4 Earnings & Revenues Miss Estimates
American Water Works Company posted fourth-quarter 2021 operating earnings per share (EPS) of 85 cents, which missed the Zacks Consensus Estimate of 86 cents by a penny. However, the bottom line improved 6.3% from the year-ago earnings of 80 cents per share.
American Water Works reported operating EPS of $4.25 for 2021, up 8.7% from $3.91 in 2020.
Total Revenues
Total revenues of $951 million lagged the Zacks Consensus Estimate of $958 million by 0.7%. However, the top line improved 3% from the year-ago figure of $923 million.
American Water Works reported total revenues of $3,930 million for 2021, up 4.1% from $3,777 million in 2020.
Highlights of the Release
Total operating expenses for the fourth quarter amounted to $731 million, up 10.8% from the year-ago quarter’s $660 million, due to higher operating and maintenance expenses along with an increase in general taxes.
Operating income was $220 million, down 16.3% from the year-ago figure of $263 million. New rates effective since Jan 1, 2021 will boost annual revenues by $218 million and the pending rate case, if approved without any change, will further increase the top line by $255 million.
American Water Works continues to expand operations through acquisitions and organic means. Till Dec 31, 2021, it added 20,000 customers to the customer base through 23 closed acquisitions in six states. AWK’s pending acquisitions (as of Dec 31), when completed, will add another 73,750 customers through 26 acquisitions. American Water Works has already added 700 customers in 2022 from the pending acquisitions of the previous year.
Operating and Maintenance (O&M) efficiency for 2021 was 34.1%, reflecting an improvement of 20 basis points from 34.3% in 2020. The improvement was due to a persistent focus on operating costs and an increase in operating revenues from Regulated businesses. American Water Works targets to take its O&M Efficiency to 30% by 2026.
Segment Details
Regulated businesses’ net income in the fourth quarter of 2021 was $166 million compared with $154 million in the year-ago quarter.
Market-Based businesses’ net income in the fourth quarter of 2021 was $491 million compared with $23 million in the year-ago quarter.
Financial Highlights
Cash and cash equivalents amounted to $116 million as of Dec 31, 2021, down 78.8% from $547 million on Dec 31, 2020. Total liquidity as of Dec 31, 2021 was $1,700 million.
The total long-term debt was $10,344 million as of Dec 31, 2021, up 10.8% from $9,333 million on Dec 31, 2020.
Guidance
American Water Works affirmed 2022 earnings guidance in the range of $4.39-$4.49 per share. The Zacks Consensus Estimate for 2022 earnings of $4.45 per share is higher than $4.44, which is the midpoint of the guided range. AWK reiterated the long-term earnings growth in the range of 7-9% for the 2022-2026 period.
American Water Works plans to invest $2.5 billion in 2022 and the $13-$14 billion range in the 2022-2026 period.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
VGM Scores
At this time, American Water Works has a subpar Growth Score of D, a grade with the same score on the momentum front. Charting a somewhat similar path, 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
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, American Water Works has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.