American Water Works Co., Inc (
Back on January 17th, I highlighted AWK as a momentum stock due
for its global fundamental growth story, earnings growth and
defensive stock properties. The water company also throws off
a 2.75% dividend yield as well, but that's just icing on the
Since that time the stock has risen over 6.5%, which is
substantial considering that this stock have an average monthly
trading range (
) of just $2.00. There have been quite a few developments over the
past month that have not only helped propel this slow moving stock
in the short term, but also may have positive effects on the stock
over the next year.
Earnings Report and Recent Developments
American Water Works is the largest publicly traded U.S. water and
wastewater utility company. Founded in 1886 with
headquarters in Voorhees, N.J., the company employs approximately
7,000 people who provide drinking water, wastewater and other
related services to an estimated 15 million people in more than 30
states and parts of Canada.
On February 29th, AWK was awarded a contract from CBC Latrobe,
LLC (City Brewery). Their Contract Services Group will
manage start-up and operations for the wastewater pre-treatment
plant at City Brewery in Latrobe, Pennsylvania. The plant will
pre-treat up to 590,000 gallons a day of wastewater from the
brewery operations before being discharged to the local municipal
wastewater plant. That plant in Latrobe produces 20 million
cases annually of beer, teas, and energy drinks.
A day prior they completed 13,300 feet of water main upgrades in
California. AWK (and this pipeline) provides reliable water
and/or wastewater services to approximately 600,000 people.
On that same day, they released Q42011 earnings, missing on
revenues but beat expectations on earnings per share and guiding
higher for 2012. They saw a significant increase in GAAP
earnings per share and margins grew across the board.
The big water company reported revenue of $639.8 million versus
expectations of about $720 million on the same basis. GAAP reported
sales were 3.7% lower than the prior-year quarter's $664.5
EPS came in at $0.36; the Zacks Consensus Estimate was for $0.32
per share. GAAP EPS of $0.36 for Q4 were 57% higher than the
prior-year quarter's $0.23 per share. All in all it was a
strong report and sent shares marching higher.
American Water Works remains a key element in the growth of this
country. The fundamentals remain intact and the stock remains
a #2 Zacks Rank Buy.
A recent study showed that our water infrastructure is in dire
need of repair. Just plugging the leaks in water pipes and
building new ones to keep up with a growing population could cost
the United States $1 trillion over the next 25 years and AWK will
play a large role in those repairs and upgrades.
Water infrastructure repair and replacement will most likely
fall on the shoulders of local municipalities, which are strained
at the moment. But with improvement in tax revenues, better
budgeting and maybe a little bit of federal aid (for green
technologies) AWK should see continued success over the
Zacks recommendation is for AWK to outperform relative to the
market with a current price target of $37.80.
READ THE ORIGINAL ARTICLE
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Alliance Data Systems (
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Due to the strengthening consumer, the average corporation is
seeing a small boost in revenues and maybe companies are likely to
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After the financial crises of 2008-09, credit all but dried up
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its slow recovery, companies like Alliance Data are providing
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With the increase we are seeing in consumer credit and
confidence, it could be a sign that things are set to improve at
ADS as well.
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They are a technology solution that provides an engine, roadmap
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Perhaps their diverse business, which is focused on the
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READ FULL STORY
Jared A Levy is the Momentum Stock Strategist for Zacks.com. He
is also the Editor in charge of the market-beating
Zacks Whisper Trader Service.
AMER WATER WORK (
): Free Stock Analysis Report
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