Connecticut Water (CTWS) Down 6.5% Since Earnings Report: Can It Rebound?

It has been about a month since the last earnings report for Connecticut Water Service, Inc. (NASDAQ:CTWS) . Shares have lost about 6.5% in that time frame, underperforming the market.

Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Connecticut Water Q3 Earnings Top, Customers Increase

Connecticut Water Service reported third-quarter 2017 earnings of 90 cents per share, which surpassed the Zacks Consensus Estimate of 88 cents by 2.3%. Earnings were up 7.1% year over year.

The company is continuing with its inorganic growth strategy. Year to date, it has added 9,500 customers through acquisitions, reflecting a customer base growth of nearly 7.5%.

Total Revenues

In the quarter under review, Connecticut Water’s total revenues were $33.5 million, up 7.1% year over year, primarily on higher contribution from its Water Operation segment.

The year-over-year increase in revenues was due to benefits derived from the acquisition of the Heritage Village Water Company in February 2017 and the Avon Water Company in July 2017. In addition, the recovery of costs for completed infrastructure replacement projects also boosted revenues.

Segment Details

Water Operations contributed $33.5 million in the third quarter to total revenues compared with $29.8 million in the prior-year quarter.

Services & Rentals contributed $1.26 million in the quarter compared with $1.41 million a year ago.

Highlights of the Release

In the third quarter, the company’s total operating expenses were $19.5 million, up nearly 4.3% year over year.

Connecticut Water’s utility operating income in the reported quarter improved 15.6% year over year to $12.6 million.

The new $30 million Rockville Water Treatment Facility that went online this spring will help the company supply high quality water to nearly 85,000 customers.

Financial Update

As of Sep 30, 2017, Connecticut Water’s current assets were $47.2 million compared with $36.5 million as of Sep 30, 2016.

Net utility plant was worth $683.7 million as of Sep 30, 2017 compared with $583.8 million as of Sep 30, 2016.

Long-term debt as of Sep 30, 2017 was $255.2 million compared with $200.2 million as of Sep 30, 2016.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last month as none of them issued any earnings estimate revisions.

Connecticut Water Service, Inc. Price and Consensus

Connecticut Water Service, Inc. Price and Consensus | Connecticut Water Service, Inc. Quote

VGM Scores

At this time, Connecticut Water Service's stock has a poor Growth Score of F, however its Momentum is doing a lot better with a B. The stock was allocated a grade of F on the value side, putting it in the bottom 20% 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.

The company's stock is suitable solely for momentum investors based on our style scores.

Outlook

Notably, the stock has a Zacks Rank #3 (Hold). We expect in-line returns from the stock in the next few months.