American Water Works (AWK) Beats On Q4 Earnings, Issues View

American Water Works Company (NYSE:AWK) posted fourth-quarter 2017 earnings per share of 69 cents, which beat the Zacks Consensus Estimate of 66 cents by 4.5%. Earnings improved 21% from the year-ago quarter.

The improvement came on the back of growth in Regulated Businesses, which was primarily driven by infrastructure investment, acquisitions and organic growth. The Market-Based Businesses were bolstered by Homeowner Services Group.

Total Revenues

Total revenues of $821 million missed the Zacks Consensus Estimate of $835 million by 1.7%. However, reported revenues were up 2.4% year over year.

Highlights of the Release

Total operating expenses in the quarter were $542 million, down 2.2% from the year-ago quarter. The savings was primarily caused by lower operation & maintenance and lower depreciation & amortization expenses compared with the year-ago quarter.

Operating income was $279 million, up 12.5% year over year.

Segment Details

Regulated businesses’ net income was $119 million, up 21.4% from $98 million reported in the year-ago quarter. In the fourth quarter, net depreciation was favored by the implementation of new depreciation rates in Illinois subsidiary and O&M expense was benefitted by the timing of expenditures last year and continued focus on cost management.

Market-based businesses’ net income was $14 million compared with $13 million in the year-ago quarter. The year-over-year increase can be attributed to growth in the Homeowner Services Group through customer gain and price increases.

Financial Highlights

Cash and cash equivalents were $55 million as of Dec 31, 2017, down from $75 million as of Dec 31, 2016.

Long-term debt was $6,498 million as of Dec 31, 2017, higher than $5,759 million as of Dec 31, 2016.

The company made capital investments of $1.7 billion in 2017, including $1.4 billion to improve infrastructure in the Regulated Businesses to provide safe, clean and reliable service and over $210 million for regulated acquisitions.

Guidance

American Water Works affirmed 2018 earnings per share guidance in the range of $3.22-$3.32 and long-term EPS growth at 7-10 % from a 2016 base.

Zacks Rank

American Water Works carries a Zacks Rank #4 (Sell).

You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Upcoming Peer Releases

American States Water Company (NYSE:AWR) , a Zacks Rank #3 (Hold) stock, is expected to report fourth-quarter 2017 results on Feb 26. The Zacks Consensus Estimate for earnings is pegged at 35 cents.

Consolidated Water Company Ltd. (NASDAQ:CWCO) , a Zacks Rank #3 stock, is expected to report fourth-quarter 2017 results on Mar 15. The Zacks Consensus Estimate for earnings is pegged at 18 cents.

Connecticut Water Services Inc. (NASDAQ:CTWS) carries a Zacks Rank #3 and is expected to report fourth-quarter 2017 results on Mar 12 .The Zacks Consensus Estimate for earnings is pegged at 21 cents.

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