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American States Water (NYSE:AWR) Q3 2020 Earnings Prep

in EARNINGS/INVESTING IDEAS by

American States Water Company (NYSE:AWR) is scheduled to report Q3 earnings results after markets close for trading on November 2, 2020.

The company is expected to report earnings of $0.75/share on revenue of $152.1 million. The consensus earnings per share (EPS) of $0.75/share is based on a poll of 4 analysts and represents a growth in eps of 9.3% over the same quarter last year, when the company reported earnings of $0.69/share.

The revenue forecast of $152.1 million based on a poll of 2 analysts implies a year-over-year (YoY) growth in revenue of 13.1%. Last year the company reported $134.5 million in revenue for the quarter.

Expected to report EPS growth of 9.3% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $152.09 $134.50 13.1%
EPS $0.75 $0.69 9.3%

Earnings Call Trends

Historically, management has exceeded analyst expectations 3 out of the last 8 tracked quarters, missed 2 quarters, and met expectations 3 quarters.

What are your expectations from American States Water Company for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.69 $0.69 0% Met
Q1, 2020 $0.43 $0.38 −11.4% Missed
Q4, 2019 $0.38 $0.45 17.4% Beat
Q3, 2019 $0.69 $0.69 0% Met
Q2, 2019 $0.54 $0.64 18.5% Beat
Q1, 2019 $0.35 $0.35 0% Met
Q4, 2018 $0.38 $0.37 −1.9% Missed
Q3, 2018 $0.60 $0.62 3.1% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by falling −1.1%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
August 3, 2020 $76.88 $76.03 −1.1% Decline
May 4, 2020 $77.77 $77.96 0.2% Increase
February 24, 2020 $90.16 $87.67 −2.8% Decline
November 4, 2019 $94.14 $90.49 −3.9% Decline

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −2.53, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.53 implies a 0.6% chance of earnings manipulation.

Fundamentals And Technical Analysis

American States Water Company is currently trading at $77.80/share, down −1.8% for the day. The company is trading at approximately 80.5% of its 52-week high of $96.64/share. The company’s stock price is up 2.3% since the last earnings report and up 1.7% over the previous week.

The company’s 14 Day Relative Price Index (RSI) of 56.42 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:AWR Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 34.13 and a forward P/E multiple of 33.98.

American States Water Company’s current share price also implies a price-to-book (P/B) multiple of 4.63. The following table summarizes some other key fundamental ratios:

Data as of October 27, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $77.80
P/E Ratio 34.1x
P/E Ratio (Fwd) 34.0x
PEG Ratio 3.3
Total Debt / Total Capital 15.7%
Levered Free Cash Flow -$14.912 million
EV / EBITDA 20.4x

Finbox

American States Water Company is a mid-cap stock with a market capitalization of $2.87 billion and a total enterprise value of $3.406 billion. The company operates in the Utilities sector and the Water Utilities industry.

American States Water Company, through its subsidiaries, provides water and electric services to residential, industrial, and other customers in the United States. It operates through three segments: Water, Electric, and Contracted Services. The company purchases, produces, distributes, and sells water, as well as distributes electricity. As of February 24, 2020, it provided water service to approximately 261,000 customers located throughout 10 counties in Northern, Coastal, and Southern California; and distributed electricity to approximately 24,000 customers in the City of Big Bear and surrounding areas in San Bernardino County, California. The company also provides water and/or wastewater services, including the operation, maintenance, and construction of facilities at the water and/or wastewater systems at various military installations. American States Water Company was founded in 1929 and is headquartered in San Dimas, California.

Expertise: financial modeling, mergers & acquisitions. Andy is also a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to do investment research. Andy’s background is in investment banking where he led the analysis on over 50 board advisory engagements involving mergers and acquisitions, fairness opinions and solvency opinions. Some of his board advisory highlights: - Sears Holdings Corp.’s $620 mm spin-off via rights offering of Sears Outlet, Hometown Stores and Sears Hardware Stores. - Cerberus Capital Management’s $3.3 bn acquisition of SUPERVALU Inc.’s New Albertsons, Inc. assets. Andy can be reached at andy@finbox.io or at +1 (516) 778-6257.

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