American Water (AWK) Unveils Earnings Guidance for 2015 - Analyst Blog

American Water Works Company, Inc. (AWK) has revealed its guidance for 2015 earnings from continuing operations of $2.55–$2.65 per share. The 2015 projection is significantly higher than the company's 2014 earnings guidance of $2.38–$2.44 per share.

Several catalysts helped American Water to increase its 2015 guidance. This includes a robust financial and operational performance backed by proper implementation of strategic initiatives like disciplined investments in organic and inorganic growth projects.

In 2013, American Water's earnings from continuing operations had stood at $2.20 per share. The company's five-year (2009–2013) compound annual growth rate for earnings per share (EPS) was around 16%. American Water is also in line to meet its long-term EPS growth target of 7%–10%, up from the 2013-level.

During the recent institutional investor presentation, American Water stated that regulated growth opportunities (capital investments and acquisitions) and market-based businesses (homeowner services, and contract operations to military, municipal and industrial entities) will likely contribute 4%–7% and 2%–5%, respectively, to its long-term (2015–2018) earnings growth.

In previous quarters, positive impacts of acquisitions and infrastructure development projects helped drive growth toward stable results. Going forward, these catalysts will likely continue to drive the company's performance.

In the first nine months of 2014, American Water invested around $0.7 billion as capital expenditure. The company plans to invest a total of $5.8 billion between 2014 and 2018, including roughly $1 billion in 2014. A major portion of the company's capital investment will focus on regulated services, including water and waste water systems upgrade, and acquisitions.

American Water makes systematic investments to acquire new assets in the same line of operations and upgrading aging infrastructure. These initiatives will collectively enable the company to provide reliable water supply and serve more customers at its service territories, at the same time, meeting government mandates and boosting future performance.

American Water currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry include American States Water Company (AWR), Aqua America Inc. (WTR) and Artesian Resources Corporation (ARTNA), each carrying a Zacks Rank #2 (Buy).