American States Water Company’s AWR expanding customer base, significant water rights in its service territories, regular dividend hikes and strong credit rating are tailwinds.
Let’s focus on the factors that make American States Water an attractive investment option.
Zacks Rank & Surprise History
The stock currently carries a Zacks Rank #2 (Buy). American States Water has trailing four-quarter positive earnings surprise of 6.47%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for fiscal 2020 earnings is pegged at $2.23 per share on revenues of $477 million. The bottom-line figure suggests a 4.69% year-over-year increase. The same for the top line calls for a 0.66% rise on a year-on-year basis. The company’s long-term (3 to 5 years) earnings growth rate is pegged at 8%.
The consensus mark for the company’s fiscal 2021 earnings is pegged at $2.37 per share on revenues of $496 million. The bottom-line figure suggests a 6.28% year-over-year increase. The same for the top line calls for a 3.98% rise on a year-on-year basis.
Increasing Customer Base
American States Water has a sturdy utility customer base and most importantly, it is increasing its electricity and water utility customer base at a slow but steady pace. At Dec 31, 2019 Golden State Water Company (“GSWC”) was serving total 285,128 customers, up 0.3% from 2018. Likewise, GSWC served 284,272 customers in 2018, compared with 283,223 customers in 2017. The trend of expanding customer base is expected to boost company’s earnings in the upcoming quarters.
Steady Dividend Payment
American States Water Company has been a steady dividend payer. In fact, the company has paid out dividends to shareholders every year since 1931 and has increased the same in each calendar year for the last 65 years. The consistent performance enables the company to continue with its shareholder-friendly moves. Its objective is to increase the dividend rate by 7% compounded annual growth over the long term.
Long-Term Price Performance
Shares of the company have surged 97.9% in the past three years compared with the industry’s growth of 64.4%.
Other Key Picks
Some other top-ranked stocks from the same sector are Duke Energy Corporation DUK, PNM Resources, Inc. PNM and Pacific Gas & Electric Co. PCG. All three stocks carry a Zack Rank of 2.
Duke Energy, PNM Resources and Pacific Gas & Electric have trailing four-quarter positive earnings surprise of 4.70%, 6.10% and 2.50%, on average, respectively.
The long-term earnings growth rate for Duke Energy, PNM Resources and Pacific Gas & Electric are pegged at 6.53%, 10.79% and 7.35%, respectively.
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