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Is American Water Works (AWK) Poised For Q1 Earnings Beat?

Published 04/30/2018, 10:59 PM
Updated 07/09/2023, 06:31 AM

American Water Works Company (NYSE:AWK) is scheduled to report first-quarter 2018 results, after the market closes on May 2. In the fourth quarter of 2017, the company delivered a positive earnings surprise of 4.55%.

Why is a Positive Surprise Likely?

A stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for an earnings beat. Per our model, American Water is likely to beat earnings this quarter as it possesses these components.

Zacks ESP: The company’s Earnings ESP is +2.44%. This is because the Most Accurate estimate is 56 cents while the Zacks Consensus Estimate is pegged at 55 cents.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: American Water Works currently has a Zacks Rank #3, which increases the possibility of a beat when combined with a positive Earnings ESP.

However, we caution against stocks with a Zacks Rank #4 (Sell) or 5 (Strong Sell) going into the earnings announcement, especially when the company is seeing a negative estimate revision momentum.

Factors to Consider

American Water Works continues to benefit from its geographical diversity which reduces the weather and regulatory risks of earnings. The company will gain from new water rates, approved by the Pennsylvania Public Utility Commission, effective Jan 1, 2018, and will increase annual revenues by $62 million.

Through infrastructure investments and acquisitions, American Water Works will continue to strengthen customer base and expand its service area. The acquisition of Village of Fisher’s water and wastewater systems in the first quarter added 850 customers to its existing customer base. It is expected to boost the company’s earnings.

The Zacks Consensus Estimate for first-quarter revenues and earnings per share is pegged at $787 million and 55 cents, reflecting year-over-year growth of 4.1% and 5.8%, respectively.

Other Stocks With Favorable Combination

Here are a few other companies from the Zacks Utilities Sector that have the right combination of elements to post an earnings beat this quarter.

PPL Corporation (NYSE:PPL) has an Earnings ESP of +0.63% and a Zacks Rank #3. It is expected to report first-quarter 2018 earnings on May 3.

Duke Energy Corporation (NYSE:DUK) has an Earnings ESP of +1.66%. It carries a Zacks Rank #3 and is anticipated to report first-quarter 2018 earnings on May 10.

IDACORP, Inc (NYSE:IDA) has an Earnings ESP of +3.55%. The company has a Zacks Rank #2 and is expected to report first-quarter 2018 earnings on May 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

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Duke Energy Corporation (DUK): Free Stock Analysis Report

IDACORP, Inc. (IDA): Free Stock Analysis Report

PPL Corporation (PPL): Free Stock Analysis Report

American Water Works (AWK): Free Stock Analysis Report

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Zacks Investment Research

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