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5 Reasons to Invest in American States Water (AWR) Stock Now
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American States Water Company’s (AWR - Free Report) expanding customer base, significant investments in improving its water infrastructure and a strong credit rating are its tailwinds.
Zacks Rank & Price Performance
American States Water carries a Zacks Rank #2 (Buy). Shares of the company have gained 4% in the past 12 months, outperforming the industry’s rise of 3%.
Growth Projections
The Zacks Consensus Estimate for 2020 earnings is pegged at $2.27 per share and for revenues, is $483.5 million. The bottom-line figure suggests an increase of 6.57% from the year-ago reported figure. The same for the top line indicates a 2.03% rise from the year-earlier reported number.
The Zacks Consensus Estimate for 2021 earnings stands at $2.43 per share and for revenues, is $500 million. The bottom-line figure indicates a 6.83% improvement from the prior-year reported figure. The same for the top line implies 3.41% growth from the year-ago reported number.
Strong Financial Position
American States Water’s long-term debt-to-capital is 44.87% compared with the Utilities sector’s 47.99%. Its times interest earned ratio improved to 5.6 at the end of first-quarter 2020 from 5.4 at the end of fourth-quarter 2019.
The strong TIE ratio reflects the company’s ability to meet its debt obligations in the near future. Moreover, amid the pandemic woes, when other companies face liquidity issues, American States Water’s improved ratio leaves a positive impact on investors.
Favorable New Rates & Systematic Investments
The California Public Utilities Commission (CPUC) approved GSWC's (subsidiary of American States Water Company) water general rate case effective Jan 1. The rate hike is likely to generate an additional $10.4 million in gross margin for 2020 compared with the prior-year gross margin. Also, the company’s systematic investments are likely to strengthen its water infrastructure.
New rates will benefit the company by recovering the amount invested in infrastructure upgrade and by helping it continue with its concerted efforts in the same direction. GSWC invested $23.2 million in company-funded capital projects during the first quarter of 2020 and expects to invest $115-$130 million throughout the year unless the company needs to revise its expenditures due to the ongoing coronavirus pandemic.
Along with American States Water, another company, American Water Works Company (AWK - Free Report) , also benefits from the rate increases and its steady capital investments in infrastructural development. Moreover, this company has plans to invest $8.8-$9.4 billion in the 2020-2024 time period and $20-$22 billion in the next decade.
Return on Equity (ROE)
The company’s ROE for the trailing 12 months is 13.44% compared with the industry’s 7.89%, reflecting its efficiency in utilizing its shareholders’ funds.
Essential Utilities pulled off average positive earnings surprise of 3.18% in the last four quarters. The Zacks Consensus Estimate for 2020 earnings has remained unchanged in the past 60 days.
Middlesex Water Company delivered average positive earnings surprise of 2.19% in the trailing four quarters. The Zacks Consensus Estimate for 2020 earnings has moved 2.5% north in the past 60 days.
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5 Reasons to Invest in American States Water (AWR) Stock Now
American States Water Company’s (AWR - Free Report) expanding customer base, significant investments in improving its water infrastructure and a strong credit rating are its tailwinds.
Zacks Rank & Price Performance
American States Water carries a Zacks Rank #2 (Buy). Shares of the company have gained 4% in the past 12 months, outperforming the industry’s rise of 3%.
Growth Projections
The Zacks Consensus Estimate for 2020 earnings is pegged at $2.27 per share and for revenues, is $483.5 million. The bottom-line figure suggests an increase of 6.57% from the year-ago reported figure. The same for the top line indicates a 2.03% rise from the year-earlier reported number.
The Zacks Consensus Estimate for 2021 earnings stands at $2.43 per share and for revenues, is $500 million. The bottom-line figure indicates a 6.83% improvement from the prior-year reported figure. The same for the top line implies 3.41% growth from the year-ago reported number.
Strong Financial Position
American States Water’s long-term debt-to-capital is 44.87% compared with the Utilities sector’s 47.99%. Its times interest earned ratio improved to 5.6 at the end of first-quarter 2020 from 5.4 at the end of fourth-quarter 2019.
The strong TIE ratio reflects the company’s ability to meet its debt obligations in the near future. Moreover, amid the pandemic woes, when other companies face liquidity issues, American States Water’s improved ratio leaves a positive impact on investors.
Favorable New Rates & Systematic Investments
The California Public Utilities Commission (CPUC) approved GSWC's (subsidiary of American States Water Company) water general rate case effective Jan 1. The rate hike is likely to generate an additional $10.4 million in gross margin for 2020 compared with the prior-year gross margin. Also, the company’s systematic investments are likely to strengthen its water infrastructure.
New rates will benefit the company by recovering the amount invested in infrastructure upgrade and by helping it continue with its concerted efforts in the same direction. GSWC invested $23.2 million in company-funded capital projects during the first quarter of 2020 and expects to invest $115-$130 million throughout the year unless the company needs to revise its expenditures due to the ongoing coronavirus pandemic.
Along with American States Water, another company, American Water Works Company (AWK - Free Report) , also benefits from the rate increases and its steady capital investments in infrastructural development. Moreover, this company has plans to invest $8.8-$9.4 billion in the 2020-2024 time period and $20-$22 billion in the next decade.
Return on Equity (ROE)
The company’s ROE for the trailing 12 months is 13.44% compared with the industry’s 7.89%, reflecting its efficiency in utilizing its shareholders’ funds.
Other Key Picks
A few other top-ranked stocks in the same i are Essential Utilities Inc. (WTRG - Free Report) and Middlesex Water Company (MSEX - Free Report) , both presently carrying the same Zacks Rank as American States Water.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Essential Utilities pulled off average positive earnings surprise of 3.18% in the last four quarters. The Zacks Consensus Estimate for 2020 earnings has remained unchanged in the past 60 days.
Middlesex Water Company delivered average positive earnings surprise of 2.19% in the trailing four quarters. The Zacks Consensus Estimate for 2020 earnings has moved 2.5% north in the past 60 days.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained and impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.
This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
See their latest picks free >>