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American States Water: A Strong Buy - Analyst Blog
On Jan 9, Zacks Investment Research upgraded
American States Water Company
) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
Consistent performance from this water utility and strong third-quarter results sparked upward earnings estimate revisions. Moreover, this utility delivered positive earnings surprises in 3 of the last 4 quarters with an average beat of 17.6%. The long-term expected earnings growth rate for this stock is 6.0%
American States Water Company reported third-quarter earnings on Nov 5. Non-GAAP earnings per share of 97 cents per share surpassed the Zacks Consensus Estimate by 21.2% and outpaced the year-ago figure by 16.9%.
Impressive performance from its Water and Contracted Services segments helped total revenue to reach $133.5 million and beat the year ago results by 11.5%.
During the quarter the company successfully curtailed net interest expenses by 12.7% to $5.4 million from $6.1 million incurred in the year-ago period. The reduction in short-term borrowing and higher interest income led to the decline in net expenses.
Consistent dividend payments since 1931 make the shares attractive. An annual dividend of $1.42 per share results in a dividend yield of 2.9%, higher than the industry average of 1.86%.
The average capital expenditure program of $85 million per year for 2013 through 2015 will enable the company to complete water projects to meet consumer demand.
The Zacks Consensus Estimate for 2012 moved higher by 19.1% to $2.66 per share over the last 60 days, as all 5 estimates were raised. The Zacks Consensus Estimate for 2013 increased 1.98% to $2.71 per share over the same period, as all 7 estimates climbed up.
Other Stocks to Consider
Besides this company, a few other water utilities are also performing well and have a favorable Zacks Rank. The stocks worth considering are American Water Works Company Inc. ( AWK ) and Aqua America Inc. ( WTR ). Both currently have a short-term Zacks Rank #2 (Buy).
AMER WATER WORK (AWK): Free Stock Analysis Report
AMER STATES WTR (AWR): Free Stock Analysis Report
AQUA AMER INC (WTR): Free Stock Analysis Report
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Zacks Investment Research