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American Water Works (NYSE:AWK) Q3 2020 Earnings Prep

in EARNINGS/INVESTING IDEAS by

American Water Works Company, Inc. (NYSE:AWK) is scheduled to report Q3 earnings results after markets close for trading on November 4, 2020.

The company is expected to report earnings of $1.38/share on revenue of $1.109 billion. The consensus earnings per share (EPS) of $1.38/share is based on a poll of 11 analysts and represents a growth in eps of 4.0% over the same quarter last year, when the company reported earnings of $1.33/share.

The revenue forecast of $1.109 billion based on a poll of 6 analysts implies a year-over-year (YoY) growth in revenue of 9.4%. Last year the company reported $1.013 billion in revenue for the quarter.

Expected to report EPS growth of 4.0% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $1,108.64 $1,013.00 9.4%
EPS $1.38 $1.33 4.0%

Earnings Call Trends

Historically, management has exceeded analyst expectations 4 out of the last 8 tracked quarters, missed 3 quarters, and met expectations 1 quarter.

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

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.97 $0.97 0% Met
Q1, 2020 $0.66 $0.67 1.3% Beat
Q4, 2019 $0.74 $0.73 −1.5% Missed
Q3, 2019 $1.30 $1.33 2.0% Beat
Q2, 2019 $0.91 $0.94 3.0% Beat
Q1, 2019 $0.63 $0.61 −3.5% Missed
Q4, 2018 $0.70 $0.69 −0.7% Missed
Q3, 2018 $1.16 $1.20 3.4% 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 did not react much to the update.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
August 5, 2020 $147.50 $146.97 −0.4% Decline
May 6, 2020 $123.43 $119.08 −3.5% Decline
February 18, 2020 $139.32 $138.70 −0.4% Decline
October 30, 2019 $119.59 $123.27 3.1% Increase

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 −2.81, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.81 implies a 0.3% chance of earnings manipulation.

Fundamentals And Technical Analysis

American Water Works Company, Inc. is currently trading at $153.90/share, down −0.5% for the day. The company is trading at approximately 95.8% of its 52-week high of $160/share. The company’s stock price is up 4.7% since the last earnings report and up 1.1% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 61.16 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:AWK Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 43.43 and a forward P/E multiple of 40.08.

American Water Works Company, Inc.’s current share price also implies a price-to-book (P/B) multiple of 4.37. The following table summarizes some other key fundamental ratios:

Data as of October 28, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $153.90
P/E Ratio 43.4x
P/E Ratio (Fwd) 40.1x
PEG Ratio 4.5
Total Debt / Total Capital 27.6%
Levered Free Cash Flow -$378 million
EV / EBITDA 20.4x

Finbox

American Water Works Company, Inc. is a large-cap stock with a market capitalization of $28.018 billion and a total enterprise value of $38.111 billion. The company operates in the Utilities sector and the Water Utilities industry.

American Water Works Company, Inc., through its subsidiaries, provides water and wastewater services in the United States. It offers water and wastewater services to approximately 1,700 communities in 16 states serving approximately 3.4 million active customers. The company serves residential customers; commercial customers, such as food and beverage providers, commercial property developers and proprietors, and energy suppliers; fire service and private fire customers; industrial customers, such as large-scale manufacturers, mining, and production operations; public authorities comprising government buildings and other public sector facilities, such as schools and universities; and other utilities and community water and wastewater systems. It also provides various warranty protection programs to residential customers; and water and wastewater services on various military installations. In addition, the company undertakes contracts with municipal customers, primarily to operate and manage water and wastewater facilities, as well as offers other related services. It operates approximately 80 surface water treatment plants; 520 groundwater treatment plants; 140 wastewater treatment plants; 52,500 miles of transmission, distribution, and collection mains and pipes; 1,000 groundwater wells; 1,500 water and wastewater pumping stations; 1,300 treated water storage facilities; and 76 dams. The company serves approximately 15 million people with drinking water, wastewater, and other water-related services in 46 states. The company was founded in 1886 and is headquartered in Camden, New Jersey.

Expertise: financial technology, analyzing market trends. Brian is a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to research stock fundamentals. Brian’s background is in physics & computer science and previously worked as a software engineer at GE Healthcare. He enjoys applying his expertise in technology to help find market trends that impact investors. Brian can be reached at brian@finbox.io or at +1 (516) 778-6257.

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