Intel stock extends gains after report of possible U.S. government stake
Introduction & Market Context
American States Water Company (NYSE:AWR) presented its second quarter 2025 financial results on August 7, 2025, reporting modest earnings growth despite falling short of analyst expectations. The company posted earnings per share of $0.87, missing the forecasted $0.91, while revenue came in at $163 million, below the anticipated $170.64 million. Despite these misses, AWR’s stock rose 2.26% to $76.05 in aftermarket trading, suggesting investor confidence in the company’s long-term strategy.
The utility company maintained its focus on infrastructure investment and dividend growth, continuing its impressive streak of 71 consecutive years of dividend increases. AWR operates through three segments: water, electric, and contracted services, with the water segment showing the strongest performance in Q2.
Quarterly Performance Highlights
American States Water reported consolidated diluted earnings per share of $0.87 for Q2 2025, a $0.02 increase from $0.85 in the same period of 2024. Year-to-date, the company’s EPS reached $1.57, up $0.10 from $1.47 in the comparable period last year.
Total (EPA:TTEF) operating revenues increased to $163 million in Q2 2025, up $7.7 million from $155.3 million in Q2 2024. This growth was primarily driven by the water and electric segments, which saw revenue increases of $9.3 million and $4.2 million, respectively.
As shown in the following EPS breakdown by segment:
The water segment was the standout performer, contributing $0.73 per share, a $0.06 increase from Q2 2024. The electric segment also showed improvement, contributing $0.03 per share compared to $0.01 in the prior year. However, these gains were partially offset by a $0.06 decline in the contracted services segment, which contributed $0.13 per share versus $0.19 in Q2 2024.
Segment Performance Analysis
The factors contributing to the $0.02 EPS increase from Q2 2024 to Q2 2025 are clearly illustrated in the following bridge:
Water revenues provided a significant $0.17 boost to EPS, but this was partially offset by higher supply costs (-$0.08) and higher operating expenses (-$0.05). The electric segment benefited from a final CPUC general rate case decision, contributing $0.02 to EPS. The contracted services segment faced challenges, with a $0.06 decrease primarily due to lower construction activity, higher operating expenses, and the dilutive impact of the ATM program.
Year-to-date performance shows similar trends across segments:
The water and electric segments delivered YTD EPS increases of $0.10 and $0.04, respectively, while contracted services decreased by $0.06. The parent company showed a $0.03 improvement, contributing to the overall $0.10 increase in consolidated EPS.
Capital Investment & Regulatory Updates
AWR continues to prioritize infrastructure investment, with regulated utilities investing $97.9 million on company-funded capital work year-to-date. Capital expenditures for 2025 are expected to be between $170-$210 million.
The company secured important regulatory approvals in early 2025. The California Public Utilities Commission (CPUC) issued a final decision in Golden State Water Company’s (GSWC) general rate case, authorizing $573.1 million in capital infrastructure investments over a three-year cycle. Similarly, Bear Valley Electric Service (BVES) received approval for $75.6 million in capital infrastructure investments.
The company’s adopted average water rate base continues to show strong growth:
With a compound annual growth rate of 10.3%, the rate base has grown from $752.2 million in 2018 to an estimated $1,357.5 million in 2024, providing a solid foundation for future earnings.
Additionally, GSWC completed a transaction to build, own, and operate water and wastewater system assets for a new community expected to have 1,300 customer connections, further expanding its service footprint.
Dividend Growth & Financial Position
One of AWR’s most notable achievements is its dividend growth record. The Board of Directors approved an 8.3% increase in the 2025 third quarter cash dividend from $0.4655 to $0.5040 per share, marking the 71st consecutive calendar year of dividend increases.
The company’s dividend growth trajectory is illustrated below:
AWR’s dividend policy targets a compound annual growth rate of more than 7% over the long term, with dividends having been paid every year since 1931. This commitment to shareholder returns has been a key factor in maintaining investor confidence despite the recent earnings miss.
The company’s liquidity position remains strong, with operating cash flows of $109.6 million for YTD 2025, compared to $70.5 million for YTD 2024. This improvement was attributed to new rates, surcharges, and the timing of cash receipts. AWR also enhanced its financial flexibility through various financing activities, including ATM issuances of $25.6 million and GSWC issuing $100 million in private placement notes.
Credit ratings remain solid, with S&P ratings of A for AWR and A+ for GSWC, both with a stable outlook.
Forward Outlook
Looking ahead, American States Water expects its contracted services segment (ASUS) to contribute $0.59-$0.63 per share in 2025, despite the recent quarterly decline. The company expressed confidence in competing for new military base contract awards and noted that completed filings for economic price adjustments would provide additional revenues and dollar margin.
Regulatory developments could impact future performance, with Senate Bill 473 seeking to align regulated water utilities with electric utilities by making revenue decoupling mandatory. This could potentially provide more stable revenues for AWR’s water segment.
The company is preparing to file its next electric rate case in early 2026 and a water rate case in July 2026, which will shape its regulatory framework for the coming years.
While AWR missed analyst expectations for Q2 2025, its consistent dividend growth, strong regulatory position, and ongoing infrastructure investments provide a foundation for long-term stability and growth, as reflected in the positive market reaction to its latest results.
Full presentation:
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