On Apr 8, 2013, shares of American Water Works Company
Inc. ( AWK
) hit a 52-week high of $41.85. American Water Works registered
positive earnings surprises in three of the last four quarters of
2012, with an average beat of 7.21%.AMER WATER WORK (AWK): Free Stock Analysis
ReportAMER STATES WTR (AWR): Free Stock Analysis
ReportSABESP -ADR (SBS): Free Stock Analysis ReportAQUA AMER INC (WTR): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment
In 2012, the company reported strong results, with full year
earnings of $2.11 per share 21.9% higher than the 2011 level of
$1.73. For the full year, revenue of $2.87 billion surpassed the
year-ago figure of $2.67 billion by 7.5%.
The long-term earnings growth goal of the company is in the range
of 7%-10%. American Water Works Company strives to achieve its goal
through regulated investments, strategic acquisitions, new service
offering and improvement in services. The company's 2013 capital
investment plan of $950 million reflects a 2.3% increase from the
American Water Works Company expects 2013 earnings per share in
the range of $2.15 to $2.25, comfortably surpassing the 2012 level.
The initiatives undertaken by the company to improve its operation
and maintenance efficiency ratio will definitely benefit the
company to achieve its target.
We expect 8% earnings growth on the back of a 5.18% top-line
increase. The Zacks Consensus Estimate for first quarter 2013 is 36
cents reflecting year-over-year growth of 24.1%.
The present valuation also makes the company attractive. Shares of
American Water Works Company currently trade at 18.82x 12-month
forward earnings, a 6.7% discount to the peer group average of
20.17x. Its price-to-book ratio of 1.66 is at a 6.7% discount to
the peer group average of 1.78.
The company has consistently paid dividends to its shareholders
and increased shareholder worth. The strong financial performance
also allowed its board of directors to increase the quarterly
dividend rate. The present annual dividend rate of $1.00 per
reflects a dividend yield of 2.41%, which is higher than the
industry average of 1.99%
American Water Works currently carries a Zacks Rank #2 (Buy). We
also prefer other water utilities like Aqua America
Inc. ( WTR
), Companhia de Saneamento Básico do Estado de São
Paulo ( SBS
) and American States Water Company ( AWR ). While Aqua
America and SBS currently carry a Zacks Rank #1 (Strong Buy),
American States Water Company retains a Zacks Rank #2 ( Buy).
Voorhees, N.J.-based American Water Works Company was founded in
1886. This is the largest publicly traded regulated water and
wastewater utility holding company in the U.S., catering to
approximately 14 million residents across the country and parts of