Aqua America, Inc. - Growth & Income

If only more things in life were as reliable as Aqua America, Inc. (WTR). The water utility has consistently paid a quarterly dividend since the end of World War II and recently raised it for the 20th time in 19 years.

The company has also delivered three consecutive positive earnings surprises, prompting analysts to raise their estimates. It is a Zacks #2 Rank (Buy).

Third Quarter Results

Third quarter earnings per share came in at 32 cents, beating the Zacks Consensus Estimate by 14%. It was a 28% increase over the same quarter in 2009.

Revenue growth was a stellar 14.9% due in part to hot and dry weather in the East, which led to increased customer usage.

Meanwhile, operating income increased 25.4% as the company was able to leverage its fixed costs.

Growth

Although the weak housing market will limit Aqua's organic growth, the company continues to deliver tuck-in acquisitions in order to grow its customer base.

The Zacks Consensus Estimate for 2010 is 91 cents, representing an 18% increase over 2009 EPS. The 2011 estimate is currently 97 cents, equating to 7% EPS growth.

Income

Aqua produces stable cash flows and has an excellent history of consistently paying a dividend. In fact, the company has paid a consecutive quarterly dividend for the last 65 years.

In August, the company announced it was raising its quarterly dividend by 6.9%. Since 2000, Aqua has raised it at a compound annual growth rate of 7.7%.

It currently yields 2.7%.

Valuation

Shares trade at 23.8x forward earnings, a premium to the industry average of 20.0x.

Aqua America, Inc. is the largest publicly-traded water utility in the U.S. serving approximately 3 million people. It is headquartered in Bryn Mawr, Pennsylvania and has a market cap of $3.2 billion.

Todd Bunton is the Growth & Income Stock Strategist for Zacks.com.

 
AQUA AMER INC (WTR): Free Stock Analysis Report
 
Zacks Investment Research