David E. Parker
Robert W. Baird & Co.
American States Water Company (AWR) reported 2Q’13 EPS of $0.85 meeting our $0.85 estimate and besting consensus by a penny. AWR earned $0.79 in 2Q’12. While earnings benefited from Golden State’s recent rate relief, earnings at American States Utility Services (ASUS) declined from last year’s results, which benefitted from accelerated construction project activity.
We maintain our EPS estimates. We assume American States Utility Services contributes $0.66 in 2013 and about $0.60 in 2014 and 2015. This compares to $0.78 in 2012.
A rebound in construction project activity, additional military base wins, or an improved allowed return on equity could provide upside to our estimates.
In late May, AWR announced a 14.1% dividend increase and 2-for-1 stock split. With a 2014 estimated payout ratio of about 60%, at the low end of the industry average of 60-70%, we believe there is room for additional annual dividend increases.
We assume 5% dividend increase each of the next two years.
Aqua America Inc. (WTR) reported 2Q’13 EPS of $0.38, which compared favorably to our consensus-matching $0.35 estimate.