American Water (AWK) to Report Q2 Earnings: What's in Store?

American Water Works Company AWK is set to release second-quarter 2020 results on Aug 5, after market close. In the last reported quarter, the company delivered an earnings surprise of 3.1%.

Let’s discuss the factors that are likely to get reflected in the upcoming quarterly results.

Factors to Note

American Water has been enjoying the benefits of both organic and inorganic initiatives. The company has a predominantly residential customer base. Higher demand from the residential group for water and wastewater services as well as stay-at-home directives are likely to have had a positive impact on second-quarter earnings, and offset the decline from commercial and industrial customer groups. In addition, the new water rates worth $53 million that came into effect since Jan 1, 2020 are likely to have boosted second-quarter earnings.

During the second quarter, American Water — through its subsidiaries — ensured no disconnection of utility services due to nonpayment of dues. This might have affected the bottom line to some extent.

Expectation

The Zacks Consensus Estimate for second-quarter earnings is pegged at 96 cents per share, which indicates year-over-year growth of 2.13%. The Zacks Consensus Estimate for total revenues is pegged at $916.9 million, which indicates year-over-year growth of 3.95%.

What the Zacks Model Unveils

Our proven model predicts an earnings beat for American Water this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not the case here as you will see below.

American Water Works Company, Inc. Price and EPS Surprise

American Water Works Company, Inc. price-eps-surprise | American Water Works Company, Inc. Quote

Earnings ESP: The company’s Earnings ESP is +1.18%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: American Water currently has a Zacks Rank #2.

Other Stocks to Consider

Here are a few other companies worth considering from the same sector that also have the right combination of elements to beat on earnings in the upcoming releases.

Essential Utilities WTRG is set to release second-quarter 2020 numbers on Aug 5. It has an Earnings ESP of +7.74% and carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

American States Water Company AWR is set to release second-quarter 2020 numbers on Aug 3. It has an Earnings ESP of +2.19% and carries a Zacks Rank #3.

CenterPoint Energy CNP is set to release second-quarter 2020 numbers on Aug 6. It has an Earnings ESP of +7.87% and carries a Zacks Rank #3.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.