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American Water (AWK) to Post Q1 Earnings: What's in Store?

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American Water Works Company (AWK - Free Report) is scheduled to release first-quarter 2019 results on May 1, after market close. In the last four quarters, the company delivered a positive earnings surprise of 3.30%.

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

Factors to Consider

American Water consistently makes considerable investments toward infrastructure upgrades and gets rate approval from the Commission to recoup expenses, which is a positive for the to-be-reported quarter as well. New rates effective February 2019 in Maryland and West Virginia will have a positive impact on the upcoming earnings.

The company has been working to lower O&M expenses through operational efficiency, which is likely to benefit the to-be-reported quarter. Expansion of customer base by organic means, and acquisitions made in Pennsylvania, Indiana and Kentucky during the quarter are likely to have a positive impact on its first-quarter earnings.

The Zacks Consensus Estimate for first-quarter revenues and earnings per share is pegged at $803 million and 69 cents, which indicates growth of 5.5% and 6.8%, respectively, from the year-ago reported figures.

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 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 -0.32%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: American Water currently has a Zacks Rank #2. The company’s favorable Zacks Rank, when combined with the negative 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

Pinnacle West Capital Corporation (PNW - Free Report) is expected to release first-quarter results on May 1. It has an Earnings ESP of +1.41% and a Zacks Rank #2.

Eversource Energy (SO - Free Report) is expected to release first-quarter results on May 1. It has an Earnings ESP of +0.10% and a Zacks Rank #2.

Entergy Corporation (ETR - Free Report) is slated to report first-quarter results on May 1. It has an Earnings ESP of +3.99% and a Zacks Rank #2.

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