Can American States Water Fire Up Growth?

On Friday, American States Water (NYSE: AWR  ) will release its latest quarterly results. The key to making smart investment decisions on stocks reporting earnings is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

American States Water is a play on the increasing importance of water services and infrastructure, and for 58 years, the company has managed to reward its shareholders with steady annual dividend increases. Let's take an early look at what's been happening with American States Water over the past quarter and what we're likely to see in its quarterly report.

Stats on American States Water

Analyst EPS Estimate


Change From Year-Ago EPS


Revenue Estimate

$105.8 million

Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo! Finance.

Can American States Water keep crushing its earnings?
Despite American States Water's run of earnings beats, analysts have nevertheless gotten more pessimistic about its near-term earnings prospects recently, shaving a nickel per share from their first-quarter estimates. Yet they've boosted longer-term calls for the full 2013 and 2014 years, reflecting the future potential the stock has. Shares have risen about 9% since early February, in line with the overall market.

American States Water is hardly the biggest player in the growing water-services industry, with rivals American Water Works (NYSE: AWK  ) and Aqua America (NYSE: WTR  ) sporting much larger networks of utilities around the country. Yet with its focus on California, American States Water lays claim to some of the thirstiest high-population areas in the nation and has plenty of future growth potential to go with its existing modest network of water infrastructure.

A court decision affecting Aqua America could have positive implications on the ability for American States Water to protect its assets from government action. Aqua America won a case in April over an Indiana town that used eminent domain to take over the company's local water-utility subsidiary, with the court ruling that the company was entitled to a jury trial over determining the fair value of the assets taken.

One potential growth area for companies like American States Water could come from desalination, with a new innovation from Lockheed Martin (NYSE: LMT  ) potentially requiring less pressure to filter out salt and other unwanted particulates. Given American States Water's location in California, salt water could become a useful source of drinking water, especially if water levels from the Colorado River and other sources dwindle.

In American States Water's quarterly report, be sure to compare its results with those of American Water Works, which reported 17% higher income from continuing operations. With big players making acquisitions to grow, American States Water needs to decide whether it wants to be a buyer of smaller utilities or a target of Aqua America, American Water Works, or another bigger company.

The best investing approach is to choose great companies and stick with them for the long term. The Motley Fool's free report "3 Stocks That Will Help You Retire Rich" names stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.

Click here to add American States Water to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2417164, ~/Articles/ArticleHandler.aspx, 9/25/2016 10:24:49 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 2 days ago Sponsored by:
DOW 18,261.45 -131.01 -0.71%
S&P 500 2,164.69 -12.49 -0.57%
NASD 5,305.75 -33.78 -0.63%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/23/2016 4:02 PM
AWR $40.63 Down -0.73 -1.76%
American States Wa… CAPS Rating: *****
AWK $76.49 Down -0.87 -1.12%
American Water Wor… CAPS Rating: ****
LMT $245.84 Down -0.78 -0.32%
Lockheed Martin CAPS Rating: ****
WTR $31.53 Down -0.14 -0.44%
Aqua America CAPS Rating: ****