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Should You Add Connecticut Water (CTWS) to Your Portfolio ?
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We updated our research report on the water utility Connecticut Water Services on Aug 16. This utility pulled off a positive earnings surprise of 7.35% in second-quarter 2017. It currently has a long-term earnings growth expectation of 6%.
As consolidation is the need of the hour in the fragmented U.S. water utility space, since 2012, Connecticut Water has expanded its customer base by 44% through acquisitions. During the first seven months of 2017, the company completed two acquisitions, which added 9,500 customers to its existing customer base.
Connecticut Water derives nearly 95% of its earnings from regulated operations. Thanks to the consistent investments in its regulated operations, the company is able to reliably serve its expanding customer base. Going forward, Connecticut Water aims to invest more than $150 million in the 2017-2019 period to strengthen its existing water infrastructure. Contributions from organic and inorganic assets have boosted the company’s financials significantly.
The improvement in net income enables the company to carry out shareholder-friendly moves. The board of directors raised the quarterly dividend rate by 5.3% during the second quarter of 2017. Including the current hike, the company has increased its dividend rate consecutively in the last 48 years. The annualized dividend rate of the company comes to $1.19 while the current dividend yield is 2.11%, better than the S&P 500’s rise of 1.84%.
However, possibility of contamination of water supplies could adversely impact the reputation of the company and hurt its financial conditions. The company will be required to incur additional costs to remove the polluted water from the system and substitute the flow of water to customers from an uncontaminated water source or provide additional treatment.
Among the other companies in the same industry, American States Water Company (AWR - Free Report) and California Water Service Group’s (CWT - Free Report) second-quarter earnings surpassed the Zacks Consensus Estimate while Aqua America Inc.’s earnings were on par.
Price Movement
Connecticut Water Services stock has gained 9.6% year to date, outperforming industry’s decline of 0.6%.
The company is well poised to benefit from strategic acquisitions and stable earnings from regulated companies.
One Simple Trading Idea
Since 1988, the Zacks system has more than doubled the S&P 500 with an average gain of +25% per year. With compounding, rebalancing, and exclusive of fees, it can turn thousands into millions of dollars.
This proven stock-picking system is grounded on a single big idea that can be fortune shaping and life changing. You can apply it to your portfolio starting today.
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Should You Add Connecticut Water (CTWS) to Your Portfolio ?
We updated our research report on the water utility Connecticut Water Services on Aug 16. This utility pulled off a positive earnings surprise of 7.35% in second-quarter 2017. It currently has a long-term earnings growth expectation of 6%.
As consolidation is the need of the hour in the fragmented U.S. water utility space, since 2012, Connecticut Water has expanded its customer base by 44% through acquisitions. During the first seven months of 2017, the company completed two acquisitions, which added 9,500 customers to its existing customer base.
Connecticut Water derives nearly 95% of its earnings from regulated operations. Thanks to the consistent investments in its regulated operations, the company is able to reliably serve its expanding customer base. Going forward, Connecticut Water aims to invest more than $150 million in the 2017-2019 period to strengthen its existing water infrastructure. Contributions from organic and inorganic assets have boosted the company’s financials significantly.
The improvement in net income enables the company to carry out shareholder-friendly moves. The board of directors raised the quarterly dividend rate by 5.3% during the second quarter of 2017. Including the current hike, the company has increased its dividend rate consecutively in the last 48 years. The annualized dividend rate of the company comes to $1.19 while the current dividend yield is 2.11%, better than the S&P 500’s rise of 1.84%.
However, possibility of contamination of water supplies could adversely impact the reputation of the company and hurt its financial conditions. The company will be required to incur additional costs to remove the polluted water from the system and substitute the flow of water to customers from an uncontaminated water source or provide additional treatment.
Connecticut Water Services currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
Earnings Performance of the Peers
Among the other companies in the same industry, American States Water Company (AWR - Free Report) and California Water Service Group’s (CWT - Free Report) second-quarter earnings surpassed the Zacks Consensus Estimate while Aqua America Inc.’s earnings were on par.
Price Movement
Connecticut Water Services stock has gained 9.6% year to date, outperforming industry’s decline of 0.6%.
The company is well poised to benefit from strategic acquisitions and stable earnings from regulated companies.
One Simple Trading Idea
Since 1988, the Zacks system has more than doubled the S&P 500 with an average gain of +25% per year. With compounding, rebalancing, and exclusive of fees, it can turn thousands into millions of dollars.
This proven stock-picking system is grounded on a single big idea that can be fortune shaping and life changing. You can apply it to your portfolio starting today.
Learn more >>