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American Water Works (AWK) Beats on Q4 Earnings Estimates
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Water utility, American Water Works Company’s (AWK - Free Report) fourth-quarter 2016 earnings per share of 57 cents per share beat the Zacks Consensus Estimate by a penny. Earnings were up 3.6% compared with the year-ago figure.
The increase in earnings can be attributable to higher earnings at the Regulated businesses and Market-based businesses segments. Market-based businesses benefited from price redeterminations in the Military Services Group.
2016 earnings per share came in at $2.84 on par with the Zacks Consensus Estimate of $2.84 per share. Full-year earnings of American Water Works were near the upper end of the guidance range of $2.81–$2.86 per share. Earnings were 7.6 % higher than the 2015 earnings of $2.64 per share.
Total Revenue
Fourth-quarter total revenue of $802 million lagged the Zacks Consensus Estimate of $810.8 million by 1.1%. However, reported revenues were, up 2.4% year over year.
Revenues for the full-year 2016 came in at $3.3 billion in line with Zacks Consensus Estimate. However, yearly revenues were 4.5% higher than the year-ago figure of $3.1 billion.
Highlights of the Release
Total operating expenses in the reported quarter inched up 0.5% to $554 million, primarily due to increase in general taxes.
Operating income in the reported quarter were $248 million up 6.9% year over year.
In 2016, capital expenditures increased $151 million or 13.0% to $1.31 billion primarily due to the continued investment across the majority of its infrastructure categories.
American Water Works Price, Consensus and EPS Surprise
Regulated businesses’ net income was $98 million, compared with $96 million for in year-ago period.
Market-based businesses’ net income was $13 million, compared with $11 million a year ago. Financial Highlights
Cash and cash equivalents were $75 million as of Dec 31, 2016, up from $45 million as of Dec 31, 2015.
Long-term debt was $5,759 million as of Dec 31, 2016, lower than $5,874 million as of Dec 31, 2015.
Guidance
American Water Works expects 2017 earnings guidance from continuing operations to the range of $2.98–$3.08 per diluted share.
Ageing infrastructure is a pressing problem for most water utilities. For 2017, American Water Works’ capital investment budget is $1.5 billion. The company aims to invest $6.7–$7.3 billion from 2017 through 2021.
Zacks Rank & Upcoming Peer Releases
American Water Works currently carries a Zacks Rank #3 (Hold).
Aqua America Inc. , a Zacks Rank #3 stock is scheduled to release fourth-quarter earnings after the market closes on Feb 22. The Zacks Consensus Estimate for the quarter is pegged at 29 cents. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
American States Water Company (AWR - Free Report) , a Zacks Rank #3 stock, is scheduled to release fourth-quarter earnings after the closing bell on Feb 23. The Zacks Consensus Estimate for the quarter is pegged at 30 cents.
California Water Service Group (CWT - Free Report) , a Zacks Rank #4 (Sell) stock, is scheduled to release fourth-quarter earnings before the market opens on Feb 23. The Zacks Consensus Estimate for the quarter is pegged at 19 cents.
Our View
American Water Works’ fourth-quarter results were impressive, courtesy consistent investments in regulated operations and contribution from the acquired assets.
The company’s inorganic growth strategy has been aiding it to expand operations and market reach. In 2016, the company paid $199 million for 15 water and wastewater systems, which added 42,000 customers to its existing customer base.
Consolidation is the need of the hour in the fragmented U.S. water utility space. The old water utility infrastructure needs ample investments for upgrade and repair, which are easier for bigger players to build. Consequently, consolidation would drive the necessary infrastructure overhauls that have become imperative for the industry at large.
We expect the ongoing capital expenditure of the American Water Works’ to improve its water and wastewater systems, thereby allowing the company to provide efficient services to its expanding customer base.
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American Water Works (AWK) Beats on Q4 Earnings Estimates
Water utility, American Water Works Company’s (AWK - Free Report) fourth-quarter 2016 earnings per share of 57 cents per share beat the Zacks Consensus Estimate by a penny. Earnings were up 3.6% compared with the year-ago figure.
The increase in earnings can be attributable to higher earnings at the Regulated businesses and Market-based businesses segments. Market-based businesses benefited from price redeterminations in the Military Services Group.
2016 earnings per share came in at $2.84 on par with the Zacks Consensus Estimate of $2.84 per share. Full-year earnings of American Water Works were near the upper end of the guidance range of $2.81–$2.86 per share. Earnings were 7.6 % higher than the 2015 earnings of $2.64 per share.
Total Revenue
Fourth-quarter total revenue of $802 million lagged the Zacks Consensus Estimate of $810.8 million by 1.1%. However, reported revenues were, up 2.4% year over year.
Revenues for the full-year 2016 came in at $3.3 billion in line with Zacks Consensus Estimate. However, yearly revenues were 4.5% higher than the year-ago figure of $3.1 billion.
Highlights of the Release
Total operating expenses in the reported quarter inched up 0.5% to $554 million, primarily due to increase in general taxes.
Operating income in the reported quarter were $248 million up 6.9% year over year.
In 2016, capital expenditures increased $151 million or 13.0% to $1.31 billion primarily due to the continued investment across the majority of its infrastructure categories.
American Water Works Price, Consensus and EPS Surprise
American Water Works Price, Consensus and EPS Surprise | American Water Works Quote
Segment Details
Regulated businesses’ net income was $98 million, compared with $96 million for in year-ago period.
Market-based businesses’ net income was $13 million, compared with $11 million a year ago.
Financial Highlights
Cash and cash equivalents were $75 million as of Dec 31, 2016, up from $45 million as of Dec 31, 2015.
Long-term debt was $5,759 million as of Dec 31, 2016, lower than $5,874 million as of Dec 31, 2015.
Guidance
American Water Works expects 2017 earnings guidance from continuing operations to the range of $2.98–$3.08 per diluted share.
Ageing infrastructure is a pressing problem for most water utilities. For 2017, American Water Works’ capital investment budget is $1.5 billion. The company aims to invest $6.7–$7.3 billion from 2017 through 2021.
Zacks Rank & Upcoming Peer Releases
American Water Works currently carries a Zacks Rank #3 (Hold).
Aqua America Inc. , a Zacks Rank #3 stock is scheduled to release fourth-quarter earnings after the market closes on Feb 22. The Zacks Consensus Estimate for the quarter is pegged at 29 cents. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
American States Water Company (AWR - Free Report) , a Zacks Rank #3 stock, is scheduled to release fourth-quarter earnings after the closing bell on Feb 23. The Zacks Consensus Estimate for the quarter is pegged at 30 cents.
California Water Service Group (CWT - Free Report) , a Zacks Rank #4 (Sell) stock, is scheduled to release fourth-quarter earnings before the market opens on Feb 23. The Zacks Consensus Estimate for the quarter is pegged at 19 cents.
Our View
American Water Works’ fourth-quarter results were impressive, courtesy consistent investments in regulated operations and contribution from the acquired assets.
The company’s inorganic growth strategy has been aiding it to expand operations and market reach. In 2016, the company paid $199 million for 15 water and wastewater systems, which added 42,000 customers to its existing customer base.
Consolidation is the need of the hour in the fragmented U.S. water utility space. The old water utility infrastructure needs ample investments for upgrade and repair, which are easier for bigger players to build. Consequently, consolidation would drive the necessary infrastructure overhauls that have become imperative for the industry at large.
We expect the ongoing capital expenditure of the American Water Works’ to improve its water and wastewater systems, thereby allowing the company to provide efficient services to its expanding customer base.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>