Aqua America (WTR) Up 0.1% Since Last Earnings Report: Can It Continue?

It has been about a month since the last earnings report for Aqua America (WTR). Shares have added about 0.1% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Aqua America due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Aqua America's Q3 Earnings & Revenues Beat Estimates

Aqua America, Inc. reported third-quarter 2019 earnings per share of 48 cents, which surpassed the Zacks Consensus Estimate of 43 cents by 11.6%.

The bottom line improved 9.1% from the year-ago figure of 44 cents.

Total Revenues

Quarterly revenues amounted to $243.6 million, which beat the Zacks Consensus Estimate of $236 million by 3.2%. Moreover, the top line increased 7.7% year over year. The uptick can be attributed to rates, customer growth from acquisitions and organic growth.

Highlights of the Release

During the third quarter, operations and maintenance expenses increased nearly 19.5% year over year to $82 million.

The company incurred interest expenses of $32.6 million, up 28.3% from the prior-year level.

Year-to-date rate increase in 2019 will boost annual revenues of the company by $59.8 million. The pending rate case, when approved, is expected to increase revenues by $63,000.

Financial Highlights

Current assets were $2,178.9 million as of Sep 30, 2019 compared with $147.2 million on Dec 31, 2018.

Long-term debt was $2,898.3 million as of Sep 30, 2019, higher than $2,398.5 million on Dec 31, 2018.

During the first nine months of 2019, the company invested $401.6 million to strengthen its infrastructure systems.

Guidance

Aqua America maintained its 2019 adjusted net earnings guidance in the range of $1.45-$1.50 per share.

It expects customer base to expand 2-3% in 2019. The company plans to invest $550 million toward infrastructure development of service communities during the year. This is part of its investment plan of nearly $1.4 billion through 2021.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -7.29% due to these changes.

VGM Scores

Currently, Aqua America has a subpar Growth Score of D, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Aqua America has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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