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Why Is American Water Works (AWK) Down 6.9% 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 6.9% 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 the most recent earnings report in order to get a better handle on the important drivers.
American Water Q2 Earnings & Revenues Beat Estimates
American Water Works Company posted second-quarter 2023 operating earnings per share (EPS) of $1.44, which surpassed the Zacks Consensus Estimate of $1.27 by 13.4%. The bottom line improved 20% from the year-ago earnings of $1.20 per share.
Total Revenues
Total revenues of $1,097 million surpassed the Zacks Consensus Estimate of $975 million by 12.5%. The top line increased 17.1% from the year-ago figure of $937 million.
Segment Details
Regulated businesses’ revenues in second-quarter 2023 were $1,088 million, up 17% from the year-ago quarter level. The year-over-year improvement in revenues was due to completed general rate cases and infrastructure proceedings for the recovery of incremental capital and acquisition investments.
Other revenues in second-quarter 2023 were $9 million compared with $7 million in the year-ago period.
Highlights of the Release
Total operating expenses for the second quarter were $665 million, up 9% from the year-ago quarter’s $610 million due to an increase in operating and maintenance expenses.
The operating income was $432 million, up 32.1% from the year-ago figure of $246 million. The actual operating income was better than our model’s projected operating income of $360.6 million.
American Water Works continues to expand operations through acquisitions and organic means. Through 10 closed acquisitions in five states, it added 7,100 customers to its base as of Jun 30, 2023. AWK’s 32 pending acquisitions (as of Jun 30), when completed, would add another 74,800 customers.
To date, the company has been authorized additional annualized revenues of $273 million from general rate cases in 2023. Further, $67 million of additional annualized revenues from infrastructure surcharges have been authorized and are effective in 2023.
Financial Highlights
Cash and cash equivalents amounted to $794 million as of Jun 30, 2023 compared with $85 million as of Dec 31, 2022.
The total long-term debt was $11,607 million as of Jun 30, 2023, up 6.23% from $10,926 million as of Dec 31, 2022.
During the first half of 2023, cash flow from operating activities was $714 million compared with $196 million in the year-ago period.
In the first half of the year, the company completed its entire 2023 financing plan with the issuance of the exchangeable senior notes in June. In total, just over $1.0 billion notes were issued with an annual interest rate of 3.625%.
Guidance
American Water Works reiterated 2023 earnings guidance at $4.72-$4.82 per share. The Zacks Consensus Estimate for 2023 earnings of $4.77 per share is on par with $4.77, the midpoint of the company’s guided range. AWK reiterated long-term earnings and dividend growth in the range of 7-9%.
The company plans to invest nearly $2.9 billion across its footprint in 2023 and expects to complete two significant acquisitions in late 2023. AWK is on track to meet its capital investment plan for the year, with $1.2 billion invested in the first half of 2023.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
VGM Scores
At this time, American Water Works has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. 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 these revisions indicates a downward shift. Notably, American Water Works has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Why Is American Water Works (AWK) Down 6.9% 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 6.9% 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 the most recent earnings report in order to get a better handle on the important drivers.
American Water Q2 Earnings & Revenues Beat Estimates
American Water Works Company posted second-quarter 2023 operating earnings per share (EPS) of $1.44, which surpassed the Zacks Consensus Estimate of $1.27 by 13.4%. The bottom line improved 20% from the year-ago earnings of $1.20 per share.
Total Revenues
Total revenues of $1,097 million surpassed the Zacks Consensus Estimate of $975 million by 12.5%. The top line increased 17.1% from the year-ago figure of $937 million.
Segment Details
Regulated businesses’ revenues in second-quarter 2023 were $1,088 million, up 17% from the year-ago quarter level. The year-over-year improvement in revenues was due to completed general rate cases and infrastructure proceedings for the recovery of incremental capital and acquisition investments.
Other revenues in second-quarter 2023 were $9 million compared with $7 million in the year-ago period.
Highlights of the Release
Total operating expenses for the second quarter were $665 million, up 9% from the year-ago quarter’s $610 million due to an increase in operating and maintenance expenses.
The operating income was $432 million, up 32.1% from the year-ago figure of $246 million. The actual operating income was better than our model’s projected operating income of $360.6 million.
American Water Works continues to expand operations through acquisitions and organic means. Through 10 closed acquisitions in five states, it added 7,100 customers to its base as of Jun 30, 2023. AWK’s 32 pending acquisitions (as of Jun 30), when completed, would add another 74,800 customers.
To date, the company has been authorized additional annualized revenues of $273 million from general rate cases in 2023. Further, $67 million of additional annualized revenues from infrastructure surcharges have been authorized and are effective in 2023.
Financial Highlights
Cash and cash equivalents amounted to $794 million as of Jun 30, 2023 compared with $85 million as of Dec 31, 2022.
The total long-term debt was $11,607 million as of Jun 30, 2023, up 6.23% from $10,926 million as of Dec 31, 2022.
During the first half of 2023, cash flow from operating activities was $714 million compared with $196 million in the year-ago period.
In the first half of the year, the company completed its entire 2023 financing plan with the issuance of the exchangeable senior notes in June. In total, just over $1.0 billion notes were issued with an annual interest rate of 3.625%.
Guidance
American Water Works reiterated 2023 earnings guidance at $4.72-$4.82 per share. The Zacks Consensus Estimate for 2023 earnings of $4.77 per share is on par with $4.77, the midpoint of the company’s guided range. AWK reiterated long-term earnings and dividend growth in the range of 7-9%.
The company plans to invest nearly $2.9 billion across its footprint in 2023 and expects to complete two significant acquisitions in late 2023. AWK is on track to meet its capital investment plan for the year, with $1.2 billion invested in the first half of 2023.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
VGM Scores
At this time, American Water Works has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. 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 these revisions indicates a downward shift. Notably, American Water Works has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.