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What's in Store for American Water's (AWK) Q2 Earnings?

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American Water Works Company (AWK - Free Report) is scheduled to release second-quarter 2019 results on Jul 31, after market close. In the last reported quarter, the company recorded a negative earnings surprise of 3.17%.

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

Factors to Consider

American Water has been consistently making considerable investments toward infrastructure upgrades and getting rate approval from the Commission to recoup expenses. This is expected to positively impact the to-be-reported quarter’s results as well. New rates, which came into effect from the second quarter in New York and Pennsylvania, and those approved since the beginning of 2019 will likely have a positive impact on earnings.

Expansion of customer base by organic means, and acquisitions made by the company to expand water and wastewater services since the beginning of 2019 are likely to have a positive impact on second-quarter earnings.

The Zacks Consensus Estimate for second-quarter revenues and earnings per share is pegged at $896.5 million and 94 cents, which indicates growth of 5.1% and 13.3%, 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.

Earnings ESP: The company’s Earnings ESP is -3.74%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

American Water Works Company, Inc. Price and EPS Surprise

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

Entergy Corporation (ETR - Free Report) is expected to release second-quarter results on Jul 31. It has an Earnings ESP of +1.39% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Southern Company (SO - Free Report) is set to release second-quarter results on Jul 31. It has an Earnings ESP of +0.46% and a Zacks Rank of 3.

Black Hills Corporation (BKH - Free Report) is scheduled to release second-quarter results on Aug 5. It has an Earnings ESP of +0.75% and a Zacks Rank of 3.

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