American States Water Benefits From Military Contracts & Investments

American States Water Company AWR is set to benefit from an expanding customer base, which increases the demand for its services and boosts its financial performance. The company also gains from regulatory approvals and long-term contracts with military bases, ensuring a consistent flow of revenues.However, this Zacks Rank #3 (Hold) company faces risk related to groundwater contamination and excessive dependency on a single state for a significant portion of its earnings.Advantageous Factors for AWRAmerican States Water has a sturdy utility customer base, and most importantly, it is increasing its electricity and water utility customer base at a slow but steady pace.The company’s subsidiary, American States Utility Services (“ASUS”), made successful transitions and started operations of the water and wastewater systems at two new military bases in April 2024. The long-term defense pacts lend stability to its earnings. During 2024, ASUS was awarded $56.5 million in new capital upgrade projects for all military bases it serves, with completion scheduled through 2027.ASUS can effectively compete for new military base contract awards in the future, based on its strong history and expertise, which can increase the subsidiary’s contribution to total earnings.Approved rate cases for regulated utilities provide a clear path for revenue and earnings growth, allowing the company to invest in infrastructure. Strategic capital investments are making American States Water’s infrastructure stronger and resilient. The regulated utilities are projected to invest nearly $573.1 million during 2025-2027.Threats for AWRThe water service providers, despite adopting safety measures, always run the risk of groundwater contamination in their service territories. American States Water might have to incur additional costs to address the potential contamination issue in the future.The company’s focus remains on a single state – California, particularly Southern California. Consequently, its financial performance largely depends on political, water supply, labor, utility cost, and regulatory risks, as well as economic conditions, natural disasters, and other factors affecting the state.AWR Stock’s Price PerformanceIn the past month, shares of American States Water have lost 3.4% against the industry’s 0.1% growth. Image Source: Zacks Investment ResearchStocks to ConsiderSome better-ranked stocks from the same industry are Consolidated Water CWCO, California Water Service Group CWT and Global Water Resources GWRS, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.The Zacks Consensus Estimate for CWCO’s 2025 earnings per share (EPS) is pinned at $1.12. It delivered an average earnings surprise of 40.1% in the last four quarters. CWT’s long-term (three to five years) earnings growth rate is 8.78%. It delivered an average earnings surprise of 51.6% in the last four quarters. The Zacks Consensus Estimate for GWRS’ 2025 EPS is pinned at 20 cents, indicating a year-over-year decline of 23.1%. The Zacks Consensus Estimate for 2025 sales is pinned at $55.85 million, indicating year-over-year growth of 6%. Radical New Technology Could Hand Investors Huge GainsQuantum Computing is the next technological revolution, and it could be even more advanced than AI.While some believed the technology was years away, it is already present and moving fast. Large hyperscalers, such as Microsoft, Google, Amazon, Oracle, and even Meta and Tesla, are scrambling to integrate quantum computing into their infrastructure.Senior Stock Strategist Kevin Cook reveals 7 carefully selected stocks poised to dominate the quantum computing landscape in his report, Beyond AI: The Quantum Leap in Computing Power.Kevin was among the early experts who recognized NVIDIA's enormous potential back in 2016. Now, he has keyed in on what could be "the next big thing" in quantum computing supremacy. Today, you have a rare chance to position your portfolio at the forefront of this opportunity.See Top Quantum Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report California Water Service Group (CWT): Free Stock Analysis Report American States Water Company (AWR): Free Stock Analysis Report Consolidated Water Co. Ltd. (CWCO): Free Stock Analysis Report Global Water Resources, Inc. (GWRS): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks