Higher water bills brought in more revenue, but they did not lift earnings per share. That was the story of this utility’s latest quarter: investment is growing the business, while expenses and financing are taking a share of the gains. There is work ahead, from replacing California pipelines to upgrading military bases. The question is how much of that work will reach the bottom line.
American States Water (AWR)
Business Quality Score: 90 / 99
Quick Tip
To keep your portfolio strong, stay on top of the financials for each company you hold. Solid companies mean better returns, so be sure to check in on their quarterly and annual numbers.
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Interesting stocks usually score 80+ on the Financial Scale, with top players hitting 90+. If that score dips below 80, it might be a good time to consider cutting ties before things take a turn.
American States Water supplies California communities through Golden State Water, provides electricity around Big Bear, and runs water systems on military bases. These businesses grow differently. California projects need regulatory approval before customers pay for them; military work depends on winning and delivering federal contracts. Management has to get both right.
A long streak with real growth
AWR pays $2.18 annually, yielding 2.42%, with 72 consecutive years of increases and +49.93% five-year dividend growth. The 59.73% payout ratio leaves some earnings available for investment. Management targets dividend growth above 7% over the long term, but that takes more than reliable water demand: approved rates and profitable construction work must keep earnings moving.
More sales, but a disappointing finish
The November 4 report missed expectations. Revenue rose 5.4% to $192.54 million, below the $195.98 million forecast, while EPS held at $1.06 against $1.09 expected. Operating income rose 9% to $67.29 million, and net income reached $42.28 million. Higher rates helped, but rising expenses and more shares outstanding diluted the benefit. The business improved; shareholders saw less progress than analysts anticipated.
The next growth comes from construction
Golden State Water has requested roughly $1 billion in capital budgets for 2028–2030. If approved, replacing and improving infrastructure would expand the assets on which it earns a regulated return. Military operations have another $31 million of construction awards scheduled through 2029. Management also plans no further share issuance through at least 2029 for current operations, removing one recent drag on per-share growth.
A Water Company That Helps Make Snow
AWR also powers the slopes at Big Bear. Its electric utility serves Bear Mountain and Snow Summit, where snowmaking machines help keep the ski season running. Unlike most California utilities, its biggest electricity demand comes on winter nights—not summer afternoons—when visitors fill the resort and snow guns get to work. The business began with just 147 customers when AWR’s predecessor acquired it in 1938
Final Take
AWR has a clear path to growth: rebuild aging infrastructure and expand military utility work. Business Quality Score: 90 places it in the elite group above 90. But regulators still decide what customers must pay, and higher borrowing and operating costs can eat into returns. The 2.42% yield and 72-year dividend-growth record have support; the next test is making a larger business produce stronger earnings per share.