Infrastructure
Water Profits Rise on Higher Rates (AWK, WTR)
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After the market closed yesterday, American Water Works (NYSE:AWK) reported third quarter EPS of $0.55 on revenues of $672 million. EPS was right on expectations, but revenues fell short by about 12%. The floods in the Midwest reduced water sales by 4.8% from the same period a year ago, reducing EPS by about 4%.
The company attributed the increase in earnings to "higher revenues inits Regulated Business," which contributed about 60% of net income.American Water’s president and CEO noted that the company continues "tomake progress in our regulatory filings." That’s the nub of the waterbusiness: convincing regulators to make customers pay more.
Aqua America (NYSE:WTR) reported very similar results for the very same reasons, so we’ll skip the details.
Investors weren’t impressed by American Water’s earnings. The stockprice fell more than 3% in after-hours trading. American Water’s shareprice is off about 18% from its 52-week high. Aqua America fared alittle better, rising nearly 2% after hours. But the stock is still offmore than 20% from 52-week highs.
Paul Ausick
November 6, 2008
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