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Why Is Aqua America (WTR) Up 7.6% Since Last Earnings Report?

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It has been about a month since the last earnings report for Aqua America (WTR - Free Report) . Shares have added about 7.6% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Aqua America due for a pullback? 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 catalysts.

Aqua America's Q2 Earnings Miss, Revenues Rise Y/Y

Aqua America Inc.  reported second-quarter 2019 earnings per share of 37 cents, lagging the Zacks Consensus Estimate by 5.1%.

The bottom line was on par with the year-ago quarter’s reported figure.

Total Revenues

Quarterly revenues amounted to $218.9 million, which missed the Zacks Consensus Estimate of $225 million by 2.8%. However, the top line jumped 3.3% year over year. The upside can be attributed to rate activity, organic growth and contribution from its acquired assets.

Highlights of the Release

The company continues to expand its operation through acquisitions.  Courtesy of its water and wastewater acquisition, the company is on track to expand its customer base by 2-3% in 2019.

Operation and maintenance expenses increased nearly 17.7% year over year to $86.5 million.

Interest expenses were $23.3 million, marginally lower than $23.7 million in the year-ago quarter.

Year-to-date rate increase in 2019 will raise annual revenues of the company by $10.5 million. The pending rate case when approved could increase revenues by $2.3 million.

Financial Highlights

Current assets were $2,117.9 million as of Jun 30, 2019 compared with $147.1 million on Dec 31, 2018.

Long-term debt was $2,749.2 million as of Jun 30, 2019, higher than $2,398.5 million on Dec 31, 2018.

During the first half of 2019, the company invested $269.2 million to strengthen its water and wastewater infrastructure.

Guidance

Aqua America reiterated its 2019 adjusted net earnings guidance within the $1.45-$1.50 per share range.

It expects customer base to expand 2-3% in 2019. The company plans to invest $550 million during the year. This is part of its investment plan of nearly $1.4 billion through 2021.

How Have Estimates Been Moving Since Then?

It turns out, estimates review flatlined during the past month. The consensus estimate has shifted -7.59% due to these changes.

VGM Scores

Currently, Aqua America has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. However, the stock was allocated a grade of F on the value side, putting it in the fifth quintile 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

Aqua America has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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