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Connecticut Water (CTWS) Misses Earnings Estimates in Q3

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Connecticut Water Service Inc. (CTWS - Free Report) reported third-quarter 2016 earnings of 84 cents per share, which lagged the Zacks Consensus Estimate of 85 cents by a penny. However, reported earnings were up 6.3% year over year.

Total Revenue

In the quarter under review, Connecticut Water’s total revenue was $31.3 million, up 2.3% year over year, primarily due to higher contribution from its Water Operation segment.

Segment Details

Water Operations contributed $29.79 million in the quarter under review, compared with $28.92 million in the year-ago quarter.

Real Estate Transactions contributed $0.08 million in the reported quarter, compared with $0.06 million in the prior-year quarter.

Services & Rentals contributed $1.41 million in the third quarter of 2016, compared with $1.57 million a year ago.

CONN WATER SVC Price, Consensus and EPS Surprise

 

CONN WATER SVC Price, Consensus and EPS Surprise | CONN WATER SVC Quote

Highlights of the Release

In the reported quarter, the company’s total operating expenses were $18.69 million, down nearly 1.6% year over year.

Connecticut Water’s quarterly operating income increased 12.7% year over year to $10.9 million. Net income in the third quarter amounted to $9.5 million, up 8.9%.

On Oct 11, 2016, Connecticut Water entered in an agreement to acquire Avon Water Company. Upon closure, the acquisition will expand Connecticut Water’s customer base by 4,800.

Financial Update

As of Sep 30, 2016, Connecticut Water’s current assets were $36.5 million, compared with $39.3 million as of Sep 30, 2015.

Net utility plant was worth $583.8 million as of Sep 30, 2016, compared with $528.9 million as of Sep 30, 2015.

Long-term debt as of Sep 30, 2016, was $200.1 million, compared with $176.7 million as of Sep 30, 2015.

Cash from operating activities in the first nine months of 2016 was $20.89 million, compared with $27.45 million in the year-ago period.

Peer Releases

American Water Works Company’s (AWK - Free Report) third-quarter earnings per share of $1.05 beat the Zacks Consensus Estimate of $1.00 by 5%.

Aqua America Inc.’s (WTR - Free Report) third-quarter earnings of 41 cents per share were 5.1% higher than the Zacks Consensus Estimate of 39 cents.

California Water Service Group’s (CWT - Free Report) third-quarter 2016 operating earnings per share of 57 cents lagged the Zacks Consensus Estimate of 48 cents by 15.8%.

Our View

Despite missing the Zacks Consensus Estimate marginally, Connecticut Water’s earnings increased from the year-ago figure primarily due to strong contribution from its regulated Water Operations segment.

The company continues to strengthen its existing infrastructure through regular capital investments, a must for the water utility space. During the first nine months of 2016, the company added $47.5 million of utility assets, compared with $30.3 million in the first nine months of 2015.

Strategic acquisitions continue to be part of Connecticut Water’s growth strategy. The company was able to expand its customer base by 45% from the 2011 level through its systematic acquisition strategy.

Connecticut Water currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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