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American Water Works Issues Outlook & 5 Year Investment Plan
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American Water Works Company, Inc. (AWK - Free Report) recently issued an update to its investors regarding 2018 EPS guidance, estimated five year adjusted EPS growth rate and infrastructure investments. Further, the company reiterated narrowed EPS adjusted guidance range for the year ending Dec 31, 2017.
Details of the Announcement
Per the announcement, American Water Works anticipates 2018 diluted EPS to be in the range of $3.22-$3.32.
The company anticipates investing in the range of $8-$8.6 billion over the span of next five years. Out of the planned expenditure $7.2 billion will be directed to regulated business.
The company also reaffirmed its narrowed 2017 earnings guidance GAAP range of $3.05-$3.11 per diluted share and an adjusted range of $3.00-$3.06 per diluted share.
Company’s Expectation
Through the long-term investment planning, the company expects to deliver safe, clean, affordable and reliable water services for customers through water and wastewater operations.
Further it believes that growth in 2018 earnings guidance and long-term investment plans will aid the company to replace existing infrastructure with newer technology. This is anticipated to facilitate cost management that will reduce customers' bills. Additionally, the company believes these factors to aid in increasing customer base over the upcoming quarters.
Water Space Requires Regular Investment
The U.S. water infrastructure in getting old and some of the water mains are nearly a century old and require immediate replacement. Investment of billions of dollars is required to improve the water infrastructure.
American Water Works has been investing regularly to upgrade and strengthen existing water and wastewater infrastructure, which will allow it to provide better services to expanding customer base.
Aqua America Inc. , a water utility, has plans to make capital investments of more than $450 million in 2017 as part of an ambitious investment target of more than $1.2 billion in the 2017-2019 period.
Water utility Connecticut Water Services has spent $66.3 million on capital projects, a little higher than its initial investment plan of $65.9 million. Its capital expenditure budget for 2017 is $56 million to fund improvements in water treatment plants and increase spending to boost infrastructure. Management has already approved a plan to invest $66.2 million in capital projects in 2018.
Bottom Line
We expect the planned long-term capital expenditure of 2018-2022 time period, to enable the company to achieve its targeted earnings growth of 7-10% per year in the aforesaid period from 2016 base.
In addition, the strategic acquisitions and organic growth bolstered customer base of the company by 26,400 year to date. The pending acquisitions could add in excess of 45,000 customers to the company’s existing base providing a boost to the top line and performance of the company.
Price Movement
Shares of American Water Works have outperformed the industry in the last three months. The stock has advanced 9% compared with the industry’s growth of 6.6%.
Global Water has a solid long-term earnings growth rate of 15%. Additionally, its current-year estimates have moved up to 9 cents per share from 7 cents in the last 60 days.
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American Water Works Issues Outlook & 5 Year Investment Plan
American Water Works Company, Inc. (AWK - Free Report) recently issued an update to its investors regarding 2018 EPS guidance, estimated five year adjusted EPS growth rate and infrastructure investments. Further, the company reiterated narrowed EPS adjusted guidance range for the year ending Dec 31, 2017.
Details of the Announcement
Per the announcement, American Water Works anticipates 2018 diluted EPS to be in the range of $3.22-$3.32.
The company anticipates investing in the range of $8-$8.6 billion over the span of next five years. Out of the planned expenditure $7.2 billion will be directed to regulated business.
The company also reaffirmed its narrowed 2017 earnings guidance GAAP range of $3.05-$3.11 per diluted share and an adjusted range of $3.00-$3.06 per diluted share.
Company’s Expectation
Through the long-term investment planning, the company expects to deliver safe, clean, affordable and reliable water services for customers through water and wastewater operations.
Further it believes that growth in 2018 earnings guidance and long-term investment plans will aid the company to replace existing infrastructure with newer technology. This is anticipated to facilitate cost management that will reduce customers' bills. Additionally, the company believes these factors to aid in increasing customer base over the upcoming quarters.
Water Space Requires Regular Investment
The U.S. water infrastructure in getting old and some of the water mains are nearly a century old and require immediate replacement. Investment of billions of dollars is required to improve the water infrastructure.
American Water Works has been investing regularly to upgrade and strengthen existing water and wastewater infrastructure, which will allow it to provide better services to expanding customer base.
Aqua America Inc. , a water utility, has plans to make capital investments of more than $450 million in 2017 as part of an ambitious investment target of more than $1.2 billion in the 2017-2019 period.
Water utility Connecticut Water Services has spent $66.3 million on capital projects, a little higher than its initial investment plan of $65.9 million. Its capital expenditure budget for 2017 is $56 million to fund improvements in water treatment plants and increase spending to boost infrastructure. Management has already approved a plan to invest $66.2 million in capital projects in 2018.
Bottom Line
We expect the planned long-term capital expenditure of 2018-2022 time period, to enable the company to achieve its targeted earnings growth of 7-10% per year in the aforesaid period from 2016 base.
In addition, the strategic acquisitions and organic growth bolstered customer base of the company by 26,400 year to date. The pending acquisitions could add in excess of 45,000 customers to the company’s existing base providing a boost to the top line and performance of the company.
Price Movement
Shares of American Water Works have outperformed the industry in the last three months. The stock has advanced 9% compared with the industry’s growth of 6.6%.
Zacks Rank
American Water Works carries a Zacks Rank #3 (Hold). A better-ranked stock from the same space is Global Water Resources, Inc. (GWRS - Free Report) which carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Global Water has a solid long-term earnings growth rate of 15%. Additionally, its current-year estimates have moved up to 9 cents per share from 7 cents in the last 60 days.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
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