tkal · AWR Q3 2026: Flat EPS, Record Operating Income, and the $65M We Misread

AWR Q3 2026: Flat EPS, Record Operating Income, and the $65M We Misread

American States Water's diluted EPS of $1.06 matched last September, and it hides the highest operating income in eleven quarters: $67.3M, up 9.0%, with water up 11.3%. Our call: fourth-quarter EPS at or above $0.79, and new debt, not a parent contribution, refinancing the $65.0M of notes due June 5, 2027. The no-equity promise is the harder test: at today's retention Golden State Water funds its 57% equity share on about $165M of capex a year, and the rate case asks for about $333M a year. We expect the regulator to approve about $860M or less of the roughly $1B ask. Approval above that with the equity share held at 57% and no new shares refutes it. We also got a number wrong in August, and this page says which.

Published November 5, 2026 · Post-print analysis · American States Water · AWR · NYSE · Q3 2026, quarter ended September 30, 2026 · reported after the close November 4, 2026 · figures from the Form 8-K Ex. 99.1 and Form 10-Q filed that day; the November 5 call is not used · Committed analyst read, not advice · For analysts covering regulated water utilities, CPUC rate cases and utility capital funding

The setup

The headline is one number twice: $1.06 this September, $1.06 last September. The feed had $1.09 (unverified, Unusual Whales consensus), so on the screen this was a $0.03 miss on no growth. The stock closed at $88.61 before the print and traded at $88.69 the next midday, up 0.09% (unverified, market data), which says the tape read past the line.

It was right to. Revenue rose 5.4% to $192.5M. Operating income rose 9.0% to $67.3M, against a prior peak of $64.0M set one quarter earlier and $61.7M a year ago. Water operating income rose 11.3%. Everything between that line and EPS went the other way: a $2.5M retirement-trust gain became a $17 thousand loss, the tax rate rose two points to 25.9%, and the share count rose 2.8%. Net income still rose 2.7%, to $42.3M.

Our call has two near dates and one far one. Fourth-quarter diluted EPS comes in at or above $0.79, which puts the year at $3.71. The $65.0M of Golden State Water notes due June 5, 2027 get refinanced with new debt at that utility, not a contribution from the parent. And when the California regulator decides the 2028 to 2030 rate case, scheduled for the fourth quarter of 2027, it approves about $860M or less of the roughly $1B ask. That last number is what the no-equity promise can carry on generous assumptions. Above it, with the 57% equity share held and no new shares, we are wrong.

First the grades, because the August page set three tests. Water held: consumption rose about 1%, supply mix stayed favorable, and nothing was given back. The retirement-trust gains were not durable, and management has now stopped counting them. The third was a mistake of ours. We read a $56.5M rise in current liabilities as capex being funded short. Most of it, and more, was $65.0M of notes crossing the one-year line. That correction changes the shape of the funding argument, so it gets its own section.

Of $192.5M of revenue, $60.0M pays for water, power and contract construction. Operating costs take $65.3M, and $67.3M of operating income is the highest in eleven quarters. Net income is $42.3M, 2.7% above last September. A utility statement carries no gross-profit line. Direct costs group the supply lines ($42.6M) and ASUS construction ($17.4M) as reported. Interest net = $11.9M interest expense less $0.8M interest income and $0.8M other, net.

The numbers

Revenue

$192.5M

+5.4% Y/Y · +6.2% Q/Q

Operating income

$67.3M

+9.0% Y/Y · prior peak $64.0M

Diluted EPS

$1.06

flat · adjusted +$0.05

Water operating income

$55.0M

+11.3% Y/Y

GSWC equity share

58.3%

from 56.9% · authorized 57%

Nine-month operating cash

$201.7M

18.9% from regulatory recovery

American States Water Q3 2026 · $ millions

Line	Q3 26	Q2 26	Q3 25	Y/Y
Revenue
Total	192.5	181.3	182.7	+5.4%
Water	139.9	131.1	132.3	+5.7%
Electric	14.9	13.6	13.3	+11.6%
Contracted services	37.7	36.6	37.1	+1.8%
Profit
Operating income	67.3	64.0	61.7	+9.0%
Water	55.0	not shown	49.4	+11.3%
Electric	3.7	not shown	2.9	+31.0%
Contracted services	8.6	not shown	9.5	−9.4%
Net income	42.3	43.3	41.2	+2.7%
Cash and balance sheet
Operating cash flow	85.2	44.9	92.4	−7.8%
Capital expenditures	58.0	48.5	54.6	+6.1%

Source: American States Water Form 8-K Ex. 99.1 and Form 10-Q, November 4, 2026 (unaudited). Quarterly cash flow derived from year-to-date figures. Notes ↓

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The headline numbers are above. The 14 sections below carry the mechanism, the peer read, the valuation work, and the dated tests that decide it.

Eleven quarters: the level before the delta
What flat was made of
What we got wrong in August
Segment by segment
The cost line capex writes
The cash under nine months
The funding stack
The promise, with a number on it
Connecting the dots
The December bar
Valuation
The strongest case against me
What we'd watch
Bottom line

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Sources

Notes. Quarterly cash flows are year-to-date differences. GSWC equity share = common equity ÷ (common equity + long-term debt + current long-term debt), excluding bank notes; with bank notes it is 57.19%. Debt room = equity ÷ 0.57 less equity and long-term debt. Self-funded capex = annualized retention ÷ 0.57 + annualized water depreciation ($32.5M nine months), excluding customer advances and contributions, which are outside rate base ($13.1M received in nine months). The 54.8% assumes $138.6M a year of retention for three years on today's balances with no 2026 or 2027 change, so it is an illustration, not a forecast. Trailing figures = FY2025 less nine months 2025 plus nine months 2026. Adjusted EPS is the company's; the June $1.01 is ours. Market value on 39.64M shares. Enterprise value adds $905.9M of debt and subtracts $26.0M of cash. The three earlier-page figures on rate base and return come from the August call as cited there.
American States Water — "Announces Third Quarter 2026 Results" (Form 8-K Ex. 99.1), November 4, 2026 — diluted EPS $1.06 vs $1.06; adjusted +$0.05; trust loss $17,000 vs gains $2.5M; total operating revenues $192,535K vs $182,716K (water $139,916K vs $132,323K, electric $14,885K vs $13,332K, contracted services $37,734K vs $37,061K); operating income $67,294K vs $61,733K; depreciation and amortization $13,174K vs $11,934K; interest expense $11,866K vs $11,711K; income before tax $57,049K vs $54,092K; income tax $14,765K vs $12,925K; net income $42,284K vs $41,167K; diluted shares 39,778K vs 38,702K; segment EPS water $0.85/$0.86, electric $0.05/$0.04, contracted services $0.17/$0.19, parent $(0.01)/$(0.03); nine-month EPS $2.92 vs $2.63, adjusted $2.86 vs $2.54; balance sheet net PP&E $2,418,267K, capitalization $1,860,668K vs $1,828,281K, current liabilities $244,188K vs $174,612K; dividend $0.5455; 2026 regulated investment $185 to $220 million; contracted services $0.63 to $0.67; about $31 million of new construction awards.
American States Water — Form 10-Q, quarter ended September 30, 2026 — balance sheets, cash flows, segment tables, regulatory balances, $65.0M notes, facilities and pay-off dates, financing authority, remaining performance obligations $4.2B, rate case descriptions, consumption, and each 10-Q quotation above.
American States Water — Form 10-Q, quarter ended June 30, 2026 — the reclassification of the $65.0M notes and the "likely beyond 2029" sentence, both already present.
Form 8-K Ex. 99.1, August 5, 2026, and earlier Forms 8-K Ex. 99.1 (May 2026, November, August and May 2025) — the quarterly revenue, operating income, depreciation and segment EPS series.
American States Water — Form 8-K Ex. 99.1, February 18, 2026 — FY2025 diluted EPS $3.37; segment $2.61, $0.25, $0.61, $(0.09); Q4 2025 EPS $0.74, water $0.50, electric $0.11, contracted services $0.16, parent $(0.03).
SEC XBRL companyfacts, CIK 1056903 — operating cash flow, capital expenditures, regulatory assets current and customer receivables series, 2024 to June 2026.
tkal — AWR Q2 2026 — the August calls graded here; the 11.3% rate base rate, the 10.06% return on equity and the S&P ratings are cited there from the August 6 call and release.
tkal pages for the rope: Amazon Q3 2026 (capex 182.12% of operating cash flow, $115.10B new debt), Alphabet Q3 2026 (121.44%), Apollo Q3 2026 (Athene cost of funds 4.05%, fixed income 98% investment grade), Meta Q3 2026 ($810.25B).
Unusual Whales market data, November 5, 2026: closes $88.61 (November 4), $81.19 (October 1), last trade $88.69, 52-week high $91.10, consensus $1.09, Freedom Broker target $77 (June 30, 2026). The November 5 call began as this page was built, and nothing from it is used.

AWR Q3 2026: Flat EPS, Record Operating Income, and the $65M We Misread

The setup

The numbers

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