Middlesex Water (MSEX) beats first quarter profit and revenue estimates

Middlesex Water (MSEX) posted quarterly earnings of $0.68 per share, beating Zacks consensus estimate of $0.50 per share. That compares to earnings of $0.39 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents a 36% earnings surprise. A quarter ago, this water utility was expected to post earnings of $0.49 per share when it actually produced earnings of $0.41, delivering a surprise -16, 33%.

In the past four quarters, the company has exceeded consensus EPS estimates twice.

Middlesex Water, which is part of the Zacks Utility – Water Supply industry, reported revenue of $36.2 million for the quarter ended March 2022, beating Zacks’ consensus estimate by 0.54%. That compares to revenues of $32.54 million a year ago. The company has exceeded consensus revenue estimates twice in the past four quarters.

The sustainability of the immediate stock price movement based on recently released numbers and future earnings forecasts will primarily depend on management’s comments on the earnings call.

Middlesex Water shares have lost around 25.1% since the start of the year against a -10% drop for the S&P 500.

What’s next for Middlesex Water?

With Middlesex Water having underperformed the market so far this year, the question on investors’ minds is: what’s next for the stock?

There is no easy answer to this key question, but a reliable measure that can help investors answer it is the company’s earnings outlook. This includes not only current consensus earnings expectations for the upcoming quarter(s), but also how those expectations have changed recently.

Empirical research shows a strong correlation between short-term stock movements and trends in earnings estimate revisions. Investors can track these revisions on their own or rely on a proven scoring tool like Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Prior to this publication of the results, the trend of revisions to the estimates for Middlesex Water: favorable. While the magnitude and direction of estimate revisions may change following the release of the company’s earnings report, the current situation results in a Zacks No. 2 (buy) ranking for the stock. Thus, stocks are expected to outperform the market in the near future. You can see the full list of today’s Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how the estimates for the next few quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.76 on $41 million in revenue for the upcoming quarter and $2.65 on $159 million in revenue for the current fiscal year.

Investors should be aware that the outlook for the sector can also have a significant impact on stock performance. In terms of Zacks industry rankings, Utilities – Water Supply currently sits in the bottom 24% of over 250 Zacks industries. Our research shows that the top 50% of industries ranked by Zacks outperform the bottom 50% by a factor of more than 2 to 1.

Essential Utilities (WTRG), another stock in the same sector, has yet to report results for the quarter ending March 2022. Results are expected to be released on May 9.

This water utility is expected to post quarterly earnings of $0.74 per share in its next report, representing a year-over-year change of +2.8%. The consensus EPS estimate for the quarter has been revised up 3.2% in the past 30 days from the current level.

Essential Utilities revenue is expected to be $627 million, up 7.4% from the year-ago quarter.

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