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American States Water (AWR) Up 3.5% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for American States Water (AWR - Free Report) . Shares have added about 3.5% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is American States 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 the most recent earnings report in order to get a better handle on the important catalysts.

American States Water Q2 Earnings Top, Revenues Rise Y/Y

American States Water reported second-quarter 2021 operating earnings of 72 cents per share, which surpassed the Zacks Consensus Estimate of 70 cents by 2.9%. Also, the bottom line improved 4.3% from the year-ago quarter’s earnings of 69 cents per share.

Total Revenues

Operating revenues of $128.4 million beat the Zacks Consensus Estimate of $124 million by 3.6%. Also, the top line improved 5.9% from $121.3 million in the prior-year quarter.

Operational Update

In the quarter under review, American States Water’s total operating expenses were $90.6 million, up 5.9% year over year. This can primarily be attributed to increase in water purchased, power purchased for pumping, power purchased for resale and groundwater production assessment expenses.

Operating income was $37.8 million, up 6% year over year.

Interest expenses were $6 million, up 13.3% year over year. Interest income was $0.3 million, down 29% from the prior-year quarter.

Segment Details

Earnings in the Water segment were 57 cents per share, up from 54 cents in the prior-year quarter. This upside was mainly driven by a higher water gross margin, resulting from new rates authorized by the California Public Utilities Commission (CPUC).

Earnings in the Electric segment of 4 cents per share were up from 3 cents in the year-ago quarter. The rise was owing to a solid electric gross margin resulting from higher customer rates for 2021, approved by the CPUC along with relatively flat operating expenses.

Earnings in the Contracted Services segment were 11 cents per share, down from 12 cents in the year-ago quarter. This can be attributed to a rise in construction costs incurred on certain projects.

Financial Update

As of Jun 30, 2021, American States Water’s cash and cash equivalents were $5.4 million compared with $36.7 million as of Dec 31, 2020.

As of Jun 30, 2021, the company’s long-term debt was $412.3 million, down from $440.3 million as of Dec 31, 2020.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.

VGM Scores

At this time, American States Water has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

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

Outlook

American States 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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