American States Water (AWR) Stock Analysis
American States Water Dividend
Current Dividend: $0.968
Dividend Yield: 2.1%
Cash Dividend Payout Ratio: Neg.
Market Capitalization: 1.7 B
Enterprise Value: 2.1 B
Industry: Utilities – Regulated Water
American States Water Co., through its subsidiaries, is engaged in the purchase, production and distribution of water and production of electricity. The Company also provides water and/or wastewater services at various military installations.
AWR provides water service to 75 communities in California and distributes electricity to the Big Bear recreational area. It is the parent company of Golden State Water Company and American States Utility Services, Inc.
American States Water SWOT Analysis
AWR has been able to improve its balance sheet the last few years. Profitability and Management efficiency ratios compare favorably with competitors in the industry. The company enjoys significant barriers to entry because it is a regulated monopoly.
Significant capital expenditures are required to maintain the aging water and sewer infrastructure. California’s business climate includes unpredictable regulators and a water shortage that creates unique challenges for doing business in the state.
AWR has a stellar long term record as a proven utility operator. The demand for water and electricity is growing. The current trend is for military bases to privatize their water needs. Public / private partnerships have proven to be a viable option for both private companies (i.e. AWR) and municipalities in need of technical expertise and financial resources to provide water services.
The drought in California is extremely serious. The lack of water may cause costs to soar and the need for large capital expenditures to increase.
Dividend Analyzer Checklist
(updated October 2016)
Dividend Safety Score (12/33 points)
Dividend Per Share (ttm): $0.90
Dividend Payout Ratio (ttm): 55%
Dividend Per Share (10 Year Growth): 6.9%
Cash From Operations (CFO) Per Share (ttm): $2.19
CFO Dividend Coverage (CFO / DPS): 2.4 (2/6 points)
Free Cash Flow (FCF) Per Share (ttm): $-1.02
FCF Dividend Coverage (FCF / DPS): -1.1 (0/6 points)
Net Financial Debt: $380 M
Total Assets: $1406 M
Net Financial Debt / Total Assets: 27% (5/12 points)
Net Financial Debt to EBITDA (ttm): 224%
Total Liabilities to Assets Ratio (Qtr.): 66%
Piotroski Score (1-9) (TTM): (5/9 points)
Profitability & Growth Score (22/33 points)
Revenue (10 Year Growth) *CAGR > 4.14%: 6.8% (4/4 points)
EPS Basic Cont. Operations (10 Year Growth) CAGR > 4.14%: 7.4% (4/4 points)
Cash From Operations (10 Year Growth) CAGR > 4.14%: 5.7% (6/6 points)
Operating Earnings Yield (ttm): 7.9% (3/7 points)
Net Income (ttm): $60 M
Gross Profit (ttm): $326 M
Total Assets: $1406 M
Gross Profitability Ratio = GP / Total Assets: 23% (5/12 points)
Cash Return On Invested Capital (CROIC)(tttm): -5%
Return on Invested Capital (ROIC): 7%
Return on Invested Capital (ROIC) (5 Year Median): 7%
Return on Invested Capital (ROIC) (10 Year Median): 6%
Valuation Score (9/34 points)
Free Cash Flow Yield (ttm): -2.6% (0/9 points)
EV to EBIT (ttm): 15.7 (4/9 points)
EV to EBITDA (ttm): 11.6 (5/9 points)
PE10: 35.4 (0/7 points)
Price to Sales Ratio (ttm): 3.3
Price to Book Value (ttm): 3.1
Price to Earnings Ratio (P/E) (ttm): 24.9
TOTAL POINTS – (43/100) (50 is an average score)
*Compound Annual Growth Rate (CAGR)
**A Compound Annual Growth Rate of 4.14% = a 50% gain over 10 years.
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(updated October 2016)
American States Water (AWR) is ranked #150 (out of 248) overall and #11 (out of 34) by the Dividend Analyzer.
American States Water (AWR) has a long track record as a proven dividend payer. However, the low dividend yield is a function of an expensive stock.
The Dividend Analyzer ranks AWR a slight below average stock. However, if you are looking only at utility stocks; AWR ranks in the top third.
Portfolio Position Disclosures:
DVB Foundation Portfolio: None
DVB Dividend Growth: None
DVB High Income: None
Arbor Asset Allocation Model Portfolio (AAAMP): None
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