American States Water Company – Momentum

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American States Water Company (AWR) reached its 52-week high on December 11 and has gained 24.3% over the last six months. Strong third-quarter results sparked upward earnings estimate revisions from all analysts covering the stock, which helped this utility operator become a Zacks #1 Rank (Strong Buy) on November 14.


Strong Quarter


On November 5, American States Water Company reported third-quarter earnings of 97 cents per share, topping the Zacks Consensus Estimate by 21.2% and outpacing the year-ago result by 16.9%.


Total revenue jumped 11.5% year over year to $133.5 million, primarily riding on strong performances from its Water and Contracted Services segments.


Total operating expenses in the quarter increased 11.2% year over year to $97 million, due mainly to a 77.2% increase in construction expenses for its American States Utility Services, Inc. subsidiary.


Earnings Estimates Move Higher


The Zacks Consensus Estimate for 2012 moved higher by 8.6% to $2.66 per share over the last 60 days, as all 5 estimates were raised. The Zacks Consensus Estimate for 2013 increased 7.9% to $2.71 per share over the same period, as all 7 estimates got a boost.


Attractive Valuation


Shares of American States Water Company are roughly trading at 17.62 times 12-month forward earnings, a 5.7% discount to the peer group average of 18.68%. The price-to-book is at 1.97x, an 18.6% premium to the peer group average of 1.67x. The price-to-sales is at 2.00x, an 8.5% discount to the peer group average of 2.17x.


The company has a trailing 12-month ROE of 11.9%, compared with the peer group average of 10.2%.


In the last 12 trading sessions, shares of the company have fared better than the 50 and 200 days moving averages of $44.47 and $42.45, respectively.

American States Water Company caters to customers in the United States and distributes water, electricity and other allied services. The $0.9 billion company has 732 employees. It competes with California Water Service Group (CWT), among others.


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