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Why Is American Water Works (AWK) Down 1.9% Since Last Earnings Report?
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It has been about a month since the last earnings report for American Water Works (AWK - Free Report) . Shares have lost about 1.9% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is American Water Works due for a breakout? 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.
American Water’s Q2 Earnings Miss Estimates, Sales Top
American Water Works Company posted second-quarter 2024 operating earnings per share (EPS) of $1.42, which lagged the Zacks Consensus Estimate of $1.47 by 3.4%. The bottom line also declined 1.4% from the year-ago quarter's earnings of $1.44 per share.
The year-over-year decline in earnings was due to the adverse impact of unfavorable weather in 2024.
Total Revenues
Total quarterly revenues of $1.14 billion surpassed the Zacks Consensus Estimate of $1.07 billion by 7.1%. The top line also increased 4.7% from the year-ago figure of $1.09 billion.
The year-over-year improvement in total revenues was attributed to authorized revenue increases from the completed general rate cases and infrastructure proceedings for the recovery of incremental capital and acquisition investments.
Segmental Details
Regulated businesses’ revenues in the second quarter of 2024 were $1.05 billion, up 5.2% year over year.
Other revenues in second-quarter 2024 were $92 million, on par with the previous-year quarter’s level.
Highlights of the Release
Total operating expenses for the second quarter were $700 million, up 5.3% from the year-ago quarter’s $665 million, due to an increase in operating and maintenance expenses.
The operating income was $449 million, up 3.9% from the year-ago figure of $432 million. The metric was a tad better than our model’s projection of $443.4 million.
AWK continues to expand operations through acquisitions and organic means. In the second quarter, the company completed five acquisitions, which added 33,400 new customers to its existing customer base.
AWK’s 22 pending acquisitions (as of Jun 30), when completed, will add another 59,000 customers.
Since Jan 1, 2024, the company has been authorized annualized revenues of $176 million from rate increases. Further, a total of $90 million of additional annualized revenues from infrastructure charges have been authorized and are effective. Currently, the rate request pending amounts to $546 million.
Financial Highlights
Cash and cash equivalents amounted to $48 million as of Jun 30, 2024, which compares with $330 million as of Dec 31, 2023. Total liquidity (including cash and credit) was $2.73 billion as of Jun 30, enough to meet near-term obligations.
The total long-term debt was $12.6 billion as of Jun 30, 2024, up 7.7% from $11.7 billion as of Dec 31, 2023.
In the first six months of 2024, cash flow from operating activities was $727 million compared with $714 million a year ago.
Guidance
American Water revised its 2024 EPS guidance to the range of $5.25-$5.30 from the prior band of $5.20-$5.30. The Zacks Consensus Estimate of $5.24 is a tad below $5.27, the midpoint of the company’s guided range. AWK reiterated long-term earnings and dividend growth in the range of 7-9%.
The company plans to invest nearly $3.1 billion across its footprint in 2024.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
Currently, American Water Works has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% 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
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise American Water Works has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Why Is American Water Works (AWK) Down 1.9% Since Last Earnings Report?
It has been about a month since the last earnings report for American Water Works (AWK - Free Report) . Shares have lost about 1.9% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is American Water Works due for a breakout? 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.
American Water’s Q2 Earnings Miss Estimates, Sales Top
American Water Works Company posted second-quarter 2024 operating earnings per share (EPS) of $1.42, which lagged the Zacks Consensus Estimate of $1.47 by 3.4%. The bottom line also declined 1.4% from the year-ago quarter's earnings of $1.44 per share.
The year-over-year decline in earnings was due to the adverse impact of unfavorable weather in 2024.
Total Revenues
Total quarterly revenues of $1.14 billion surpassed the Zacks Consensus Estimate of $1.07 billion by 7.1%. The top line also increased 4.7% from the year-ago figure of $1.09 billion.
The year-over-year improvement in total revenues was attributed to authorized revenue increases from the completed general rate cases and infrastructure proceedings for the recovery of incremental capital and acquisition investments.
Segmental Details
Regulated businesses’ revenues in the second quarter of 2024 were $1.05 billion, up 5.2% year over year.
Other revenues in second-quarter 2024 were $92 million, on par with the previous-year quarter’s level.
Highlights of the Release
Total operating expenses for the second quarter were $700 million, up 5.3% from the year-ago quarter’s $665 million, due to an increase in operating and maintenance expenses.
The operating income was $449 million, up 3.9% from the year-ago figure of $432 million. The metric was a tad better than our model’s projection of $443.4 million.
AWK continues to expand operations through acquisitions and organic means. In the second quarter, the company completed five acquisitions, which added 33,400 new customers to its existing customer base.
AWK’s 22 pending acquisitions (as of Jun 30), when completed, will add another 59,000 customers.
Since Jan 1, 2024, the company has been authorized annualized revenues of $176 million from rate increases. Further, a total of $90 million of additional annualized revenues from infrastructure charges have been authorized and are effective. Currently, the rate request pending amounts to $546 million.
Financial Highlights
Cash and cash equivalents amounted to $48 million as of Jun 30, 2024, which compares with $330 million as of Dec 31, 2023. Total liquidity (including cash and credit) was $2.73 billion as of Jun 30, enough to meet near-term obligations.
The total long-term debt was $12.6 billion as of Jun 30, 2024, up 7.7% from $11.7 billion as of Dec 31, 2023.
In the first six months of 2024, cash flow from operating activities was $727 million compared with $714 million a year ago.
Guidance
American Water revised its 2024 EPS guidance to the range of $5.25-$5.30 from the prior band of $5.20-$5.30. The Zacks Consensus Estimate of $5.24 is a tad below $5.27, the midpoint of the company’s guided range. AWK reiterated long-term earnings and dividend growth in the range of 7-9%.
The company plans to invest nearly $3.1 billion across its footprint in 2024.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
Currently, American Water Works has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% 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
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise American Water Works has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.