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What's in Store for American Water Works' (AWK) Q4 Earnings?

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American Water Works Company (AWK - Free Report) is scheduled to release fourth-quarter 2018 results on Feb 19, after market close. In the last reported quarter, the company delivered a positive earnings surprise of 3.45%.

Let’s see how things are shaping up for this water utility prior to the earnings announcement.

Factors to Consider

American Water Works consistently makes considerable investments toward infrastructure upgrade, water treatment, improvement of water mains and wastewater systems for providing high-quality services to its expanding customer base.

The company is also trying to lower O&M expenses through operational efficiency. The new water rates and addition of new customers through acquisitions and organic means are likely to have a positive impact on its fourth-quarter earnings. Incidentally, in the first nine months of 2018, 16,500 new customer accounts were added through acquisitions and organic growth. However, the company might have experienced higher expenses in the fourth quarter due to a shift in the timing of certain expenses, which may impact earnings.

The Zacks Consensus Estimate for fourth-quarter revenues is pegged at $867 million, which reflects year-over-year growth of 5.6%. Earnings estimates of 69 cents were in line with the year-ago period.

Earnings Whispers

A stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to beat estimates. However, American Water Works does not have the required combination, as elaborated below. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP: The company’s Earnings ESP is 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: American Water Works currently has a Zacks Rank #2. The company’s favorable Zacks Rank when combined with the neutral ESP lowers the possibility of an earnings beat.

However, we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing a negative estimate revision momentum.

Utility Stocks With Favorable Combination

The Southern Company (SO - Free Report) is expected to release fourth-quarter results on Feb 20. It has an Earnings ESP of +9.86% and a Zacks Rank #2.

Consolidated Edison, Inc. (ED - Free Report) is slated to report fourth-quarter results on Feb 21. It has an Earnings ESP of +0.33% and a Zacks Rank #2.

Pinnacle West Capital Corporation (PNW - Free Report) is expected to release fourth-quarter results on Feb 22. It has an Earnings ESP of +4.17% and a Zacks Rank #2.

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