A month has gone by since the last earnings report for American States Water (AWR Quick QuoteAWR - Free Report) . Shares have lost about 3.2% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is American States Water due for a breakout? 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 drivers.

American States Water Q4 Earnings Surpass Estimates

American States Water Company reported fourth-quarter 2023 operating earnings per share (EPS) of 55 cents, which beat the Zacks Consensus Estimate of 53 cents by 3.8%. The bottom line increased 10% from the year-ago quarter’s 50 cents.

Earnings per share for 2023 were $2.85, up 27.2% year over year from the $2.24 reported in 2022.

Total Revenues

Operating revenues came in at $125.2 million, missing the Zacks Consensus Estimate of $132 million by 2.2%. The top line is also a tad lower than $125.3 million reported in the prior year.

Total revenues for 2023 were $595.7 million, up 21.2% year over year.

Highlights of the Release

Operating expenses in the quarter were $90.3 million, down 7.6% from the year-ago quarter’s $97.7 million. This can be attributed to lower ASUS construction expenses.

Operating income totaled $34.9 million, up 26.4% from $27.6 million in the corresponding period of 2022.

Interest expenses were $10.8 million, up 38.5% year over year. Interest income totaled $1.6 million, up 72.9% year-over-year.

AWR continues to pay dividend to its shareholders and raised annual dividend rate by 8.2% in 2023. Management has approved dividend increase each calendar year for 69 consecutive years.

Segmental Details

Earnings from the Water segment amounted to 41 cents per share, up 46.4% from 28 cents a year ago. This year-over-year improvement was due to rate increases.

Earnings from the Electric segment were recorded at 7 cents per share, which was down 12.5% year over year. The decline was due to an increase in operating costs and interest expenses. Having no new rates in 2023 also impacted performance.

The same from the Contracted Services segment came in at 12 cents per share, down 29.4% year over year. The downtick was due to a decrease in construction activity resulting from timing differences of when such work was performed throughout 2023 compared with 2022.

The loss from AWR (Parent) was 4 cents per share, wider than a loss of 3 cents a year ago. This was due to a hike in interest expense resulting from higher short-term interest rates.

Financial Update

As of Dec 31, 2023, AWR’s cash and cash equivalents totaled $14.1 million compared with $5.9 million as of Dec 31, 2022.

As of Dec 31, 2023, the company’s long-term debt was $575.5 million compared with $446.5 million as of Dec 31, 2022.

In 2023, cash provided by operating activities totaled $67.7 million compared with $117.8 million in 2022.

 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates.

VGM Scores

At this time, American States Water has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. However, 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

Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. It comes with little surprise American States Water has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.