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Will American Water Works (AWK) Disappoint in Q1 Earnings?

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American Water Works Company (AWK - Free Report) is scheduled to report first-quarter 2017 results after the market closes on May 3. Last quarter, the company’s earnings surpassed the Zacks Consensus Estimate by 1.79%. Let’s see how things are shaping up for the first quarter.

Factors to Consider

Military Service Group performance was below expectations due to lower capital upgrades and could be a headwind in the first quarter as well. In addition, increase in the operating expenses in a concern and can impact the margins of the company.

During the quarter, Iowa American Water received approval from the Iowa Utilities Board to increase water rates. The rate hike will enable the company to recoup the investment made to strengthen water infrastructure.

Earnings Whispers

Our proven model does not conclusively show that American Water Works is likely to beat earnings estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here, as you will see below.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

American Water Works Price and EPS Surprise

 

American Water Works Price and EPS Surprise | American Water Works Quote

Zacks ESP: American Water Works’ Earnings ESP is 0.00%, as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 52 cents.

Zacks Rank: American Water Works carries a Zacks Rank #4 (Sell). As it is, we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.

Stocks to Consider

American Water Works Company does not have the correct mix to come out with an earning surprise this season. However, the following companies from the Zacks categorized Utility sector have the right combination of elements to post an earnings beat this quarter.

NiSource Inc. (NI - Free Report) has an Earnings ESP of +2.15% and a Zacks Rank #2. It is slated to report first-quarter 2017 earnings on May 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

PPL Corporation (PPL - Free Report) has an Earnings ESP of +1.61% and a Zacks Rank #3. It is slated to report first-quarter 2017 earnings on May 4.

Dominion Resources (D - Free Report) has an Earnings ESP of +2.15% and a Zacks Rank #3. It is slated to report first-quarter 2017 earnings May 4.

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