Artesian Resources Corp. :ARTNA-US: Earnings Analysis: 2016 By the Numbers : March 15, 2017

Artesian Resources Corp. reports financial results for the year ended December 31, 2016.

We analyze the earnings along side the following peers of Artesian Resources Corp. – York Water Company, Middlesex Water Company, Aqua America, Inc., SJW Group, American States Water Company, California Water Service Group and American Water Works Company, Inc. (YORW-US, MSEX-US, WTR-US, SJW-US, AWR-US, CWT-US and AWK-US) that have also reported for this period.

Highlights

  • Gross margins widened from 38.60% to 40.01% compared to the same period last year, operating (EBITDA) margins now 45.95% from 44.41%.
  • Year-on-year change in operating cash flow of 5.28% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Earnings growth from operating margin improvements as well as one-time items.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2016 2015 2014 2013 2012
Relevant Numbers (Annual)
Revenues 79.09 77.02 72.47 69.07 70.56
Revenue Growth (YOY) N/A N/A N/A N/A N/A
Earnings 12.95 11.31 9.51 8.3 9.85
Earnings Growth (YOY) 14.59 18.92 14.52 -15.69 45.95
Net Margin 16.38 14.68 13.12 12.02 13.95
EPS 1.41 1.26 1.07 0.94 1.13
Return on Equity 9.55 8.77 7.68 6.92 8.52
Return on Assets 2.94 2.65 2.3 2.09 2.56

Access our Ratings and Scores for Artesian Resources Corp.

Earnings Growth Analysis

The company’s earnings growth was influenced by year-on-year improvement in gross margins from 38.60% to 40.01% as well as better cost controls. As a result, operating margins (EBITDA margins) rose from 44.41% to 45.95% compared to the same period last year. For comparison, gross margins were 38.60% and EBITDA margins were 44.41% in the last reporting period.

Gross Margin Versus EBITDA Margin

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Commodity; Low Cost, Commodity; High Cost, Differentiated; High Cost

Cash Versus Earnings – Sustainable Performance?

It is important to examine a company�s cash versus earnings numbers to gauge whether its performance is sustainable.

ARTNA-US‘s change in operating cash flow of 5.28% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.

Operating Cash Flow Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Cash Flow based Earnings, Likely Non-cash Earnings, Low Cash Flow Base, Likely Undeclared Earnings

Margins

The company’s earnings growth has also been influenced by the following factors: (1) Improvements in operating (EBIT) margins from 32.93% to 34.33% and (2) one-time items. The company’s pretax margins are now 26.91% compared to 24.78% for the same period last year.

EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables
EBIT Margin History
PreTax Margin History

Access our Ratings and Scores for Artesian Resources Corp.

Company Profile

Artesian Resources Corp. is a holding company that engages in the provision of water resource management. Its services involves identifying new and dependable sources of water supply; developing wells, treatment plants and delivery systems to get water to customers; educating customers on the wise use of water and providing responsible wastewater management to assist with recharge of the aquifers. It distributes and sells water, including water for public and private fire protection, to residential, commercial, industrial, municipal and utility customers throughout the states of Delaware, Maryland and Pennsylvania. The company was founded in 1927 and is headquartered in Newark, DE.

CapitalCube does not own any shares in the stocks mentioned and focuses solely on providing unique fundamental research and analysis on approximately 50,000 stocks and ETFs globally. Try any of our analysis, screener or portfolio premium services free for 7 days. To get a quick preview of our services, check out our free quick summary analysis of ARTNA-US.