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Why Is Consolidated Water (CWCO) Up 9.9% Since Last Earnings Report?

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A month has gone by since the last earnings report for Consolidated Water (CWCO - Free Report) . Shares have added about 9.9% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Consolidated Water due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Consolidated Water Q1 Earnings Top, Sales Dip Y/Y

Consolidated Water Co. Ltd. reported first-quarter 2021 earnings of 8 cents per share, beating the Zacks Consensus Estimate by 60%. However, earnings were down 61.9% from 21 cents per share recorded in the year-ago quarter.

Revenues

The company’s total revenues for first-quarter 2021 came in at $17 million, on par with the Zacks Consensus Estimate. However, total revenues were down 19% year over year. The year-over-over year decline in revenues was due to lower contribution from its retail and manufacturing segments.

Segment Details

Retail revenues for first-quarter 2021 decreased 21.3% year over year to $5.71 million. This reflects a 20% decrease in the volume of water sold by Cayman Water due to the closing of Grand Cayman Island to tourists in March 2020 in response to the COVID-19 pandemic.

Bulk revenues came in at $6.24 million for first-quarter 2021, down 3% from the prior-year figure. The decrease in revenues was due to lower rates and reduced energy costs in the Bahamas, which in turn lowered energy pass-through charges to customers therein.

Manufacturing revenues amounted to $1.6 million for the first quarter, down 58.9% year over year. The year-over year decline was due to decrease in orders from Aerex’s former largest customer.

Services revenues were $3.11 million for the first quarter, up 13.7% year over year. The year-over-year improvement was due to contribution from new operating and maintenance contracts.

Other Details

General and administrative expenses for the quarter increased 1.5% from the year-ago level to $4.76 million.

Management aims to expand operations and water solutions in 2021 through organic growth, acquisitions as well as new projects.

Financial Highlights

Cash and cash equivalents as of Mar 31, 2021 were $42.8 million, up from $43.8 million on Dec 31, 2020.

Long-term debt as of Mar 31, 2021 was $0.16 million compared with $0.13 million on Dec 31, 2020.

Cash provided from (used in) operating activities in first-quarter 2021 was $1.08 million compared with ($0.3) million in the comparable year-ago period.

How Have Estimates Been Moving Since Then?

Estimates revision followed a downward path over the past two months.

VGM Scores

Currently, Consolidated Water has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Consolidated Water has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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