American Water (AWK) AI Stock Analysis

• Market Cap: $28.72B
• Dividend Yield: 2.22%
• Average Volume (3M): 1.43M
• Price to Earnings (P/E): 25.6
• Beta (1Y): 0.06
• Revenue Growth: 13.37%
• EPS Growth: 13.29%
• Country: US
• Employees: 6,700
• Sector: Utilities
• Sector Strength: 87
• Industry: Regulated Water
• EPS (TTM): 1.48
• Shares Outstanding: 202,140,820
• 10 Day Avg. Volume: 2,194,145
• 30 Day Avg. Volume: 1,425,429
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 1.46
• Enterprise Value/Revenue: 8.50
• Enterprise Value/Gross Profit: 14.13
• Enterprise Value/Ebitda: 14.95
• 1Y Price Target: $140.00
• Price Target Upside: -2.60% Downside
• Rating Consensus: Hold
• Number of Analyst Covering: 8

• Rating: 71 Outperform
• Price Target: $157.00 ▲(9.23% Upside)

American Water's strong earnings call and stable valuation are the most significant factors contributing to the score. While financial performance shows growth, high leverage and negative free cash flow are concerns. Technical indicators suggest a neutral trend, supporting a balanced outlook.

Positive Factors

Acquisition Growth

The $315 million transaction with Nexus Water Group would significantly increase AWK's acquisition backlog, tripling it in the process.

Regulatory Approval

AWK's acquisition of a municipal township was approved by the PA PUC 5-0 which may be a step in the right direction.

Negative Factors

Regulatory Risks

There is potential regulatory pressure over the next few years, which could challenge sector valuations.

Valuation Concerns

The analyst maintains an Underperform rating on AWK primarily due to valuation, which is at a 35% premium compared to electric and gas peers.

American Water Business Overview & Revenue Model

Company Description

American Water Works Company, Inc., through its subsidiaries, provides water and wastewater services in the United States. It offers water and wastewater services to approximately 1,700 communities in 14 states serving approximately 3.4 million active customers. The company serves residential customers; commercial customers, including food and beverage providers, commercial property developers and proprietors, and energy suppliers; fire service and private fire customers; industrial customers, such as large-scale manufacturers, mining, and production operations; public authorities comprising government buildings and other public sector facilities, such as schools and universities; and other utilities and community water and wastewater systems. It also provides water and wastewater services on various military installations; and undertakes contracts with municipal customers, primarily to operate and manage water and wastewater facilities, as well as offers other related services. In addition, the company operates approximately 80 surface water treatment plants; 480 groundwater treatment plants; 160 wastewater treatment plants; 52,500 miles of transmission, distribution, and collection mains and pipes; 1,100 groundwater wells; 1,700 water and wastewater pumping stations; 1,300 treated water storage facilities; and 76 dams. It serves approximately 14 million people with drinking water, wastewater, and other related services in 24 states. American Water Works Company, Inc. was founded in 1886 and is headquartered in Camden, New Jersey.

How the Company Makes Money

American Water generates revenue primarily through its regulated utility operations, which provide stable and predictable cash flows. The company earns money by charging customers for water and wastewater services, with rates determined by regulatory bodies in the states where it operates. Additionally, American Water has a significant presence in the market-based segment, which includes operations such as water system operations and maintenance for municipalities and private companies, as well as industrial water services. Key revenue streams include residential water bills, wastewater service charges, and fees from industrial and commercial contracts. The company also benefits from infrastructure investments, which allow for rate increases approved by regulators, contributing to growth in revenue. Partnerships with municipalities and private entities further enhance its earnings potential through service contracts and joint ventures in water management and infrastructure projects.

American Water Financial Statement Overview

Summary

American Water shows strong revenue growth and profitability with stable returns on equity. However, high leverage and negative free cash flow present potential risks. The company needs to address its cash flow challenges to maintain financial stability.

Income Statement

American Water shows consistent revenue growth with a TTM growth rate of 2.64%. The company maintains strong profitability with a gross profit margin of 60.14% and a net profit margin of 21.91% in the TTM. However, the EBIT margin has decreased from 40.18% in 2024 to 29.10% in the TTM, indicating some pressure on operational efficiency.

Balance Sheet

The company has a relatively high debt-to-equity ratio of 1.41 in the TTM, which is a concern for leverage. However, the return on equity remains stable at 10.34%, reflecting efficient use of equity. The equity ratio is not provided, but the overall balance sheet indicates a stable financial position.

Cash Flow

Operating cash flow remains positive, but the free cash flow is negative, with a TTM free cash flow to net income ratio of -0.51. This indicates potential challenges in generating free cash flow. The operating cash flow to net income ratio is 0.49, suggesting moderate cash flow efficiency.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	4.94B	4.68B	4.23B	3.79B	3.93B	3.78B
Gross Profit	2.97B	2.83B	2.51B	2.20B	2.15B	2.15B
EBITDA	2.81B	2.67B	2.36B	2.00B	1.91B	1.90B
Net Income	1.08B	1.05B	944.00M	820.00M	1.26B	709.00M
Balance Sheet
Total Assets	33.91B	32.83B	30.30B	27.79B	26.07B	24.77B
Cash, Cash Equivalents and Short-Term Investments	94.00M	96.00M	330.00M	85.00M	116.00M	547.00M
Total Debt	15.06B	14.11B	12.44B	12.45B	11.06B	11.02B
Total Liabilities	23.23B	22.50B	20.50B	20.09B	18.78B	18.31B
Stockholders Equity	10.68B	10.33B	9.80B	7.69B	7.30B	6.45B
Cash Flow
Free Cash Flow	-987.00M	-811.00M	-860.00M	-1.31B	-432.00M	-502.00M
Operating Cash Flow	1.95B	2.04B	1.87B	1.11B	1.44B	1.43B
Investing Cash Flow	-3.25B	-3.38B	-2.81B	-2.13B	-1.54B	-2.06B
Financing Cash Flow	1.33B	1.11B	1.19B	1.00B	-345.00M	1.12B

American Water Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 143.73
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AWK, the sentiment is Positive. The current price of 143.73 is above the 20-day moving average (MA) of 141.89, above the 50-day MA of 140.82, and above the 200-day MA of 135.55, indicating a bullish trend. The MACD of 0.77 indicates Negative momentum. The RSI at 54.25 is Neutral, neither overbought nor oversold. The STOCH value of 53.37 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for AWK.

American Water Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
SBS	76 Outperform	$15.53B	8.47	30.12%	2.40%	30.74%	143.94%
WTRG	73 Outperform	$10.88B	16.59	10.02%	3.37%	20.70%	14.59%
AWK	71 Outperform	$28.72B	25.58	10.40%	2.22%	13.37%	13.29%
CWT	68 Neutral	$2.78B	20.41	8.49%	2.61%	0.62%	-24.24%
HTO	68 Neutral	$1.77B	16.39	7.50%	1.67%	12.40%	11.98%
AWR	67 Neutral	$2.93B	23.36	13.77%	2.44%	8.55%	13.57%
Sector *	62 Neutral	HK$30.30B	9.31	5.05%	4.60%	-3.25%	1.36%

American Water Corporate Events

American Water Enters New Forward Sale Agreements

On August 7, 2025, American Water Works Company, Inc. entered into additional forward sale agreements with several banks for the sale of over 1 million shares of its common stock, following a previous underwriting agreement for a larger public offering. This move was part of a broader financial strategy, including the issuance of $900 million in senior notes by its subsidiary, American Water Capital Corp., to support its regulated business segment, repay obligations, and fund general corporate purposes.

The most recent analyst rating on (AWK) stock is a Hold with a $147.00 price target. To see the full list of analyst forecasts on American Water stock, see the AWK Stock Forecast page.

American Water Finalizes Forward Sale Agreements

On August 4, 2025, American Water Works Company, Inc. entered into forward sale agreements with Wells Fargo, JPMorgan Chase, and Mizuho Markets for over 7 million shares of its common stock. This move, finalized on August 6, 2025, involved an underwriting agreement allowing the sale of these shares to underwriters, with an option for additional shares. The transaction is part of a registered public offering under the Securities Act of 1933, potentially impacting American Water’s financial operations and market positioning.

The most recent analyst rating on (AWK) stock is a Buy with a $164.00 price target. To see the full list of analyst forecasts on American Water stock, see the AWK Stock Forecast page.

American Water Seeks Rate Increase in Maryland

On August 1, 2025, Maryland American Water filed a request with the Maryland Public Service Commission to adjust its water rates, seeking an increase of $3.0 million in annualized revenues. This request is driven by $22 million in capital investments made from February 2019 through April 2025, aimed at replacing aging infrastructure and maintaining high-quality water service. The proposed rates include a two-tiered structure to promote affordability, with potential increases for residential customers in Bel Air and the Severn District. The new rates, if approved, are expected to take effect in March 2026, following a thorough review by the Commission.

The most recent analyst rating on (AWK) stock is a Buy with a $164.00 price target. To see the full list of analyst forecasts on American Water stock, see the AWK Stock Forecast page.

American Water Seeks Rate Increase for Infrastructure Upgrades

On July 1, 2025, California American Water filed a request with the California Public Utilities Commission to increase water and wastewater rates for 2027-2029, driven by $750 million in infrastructure investments. If approved, the new rates would affect customer bills starting January 2027, with potential changes ranging from a $3 decrease to a $17 increase per month. The proposal aims to enhance infrastructure and ensure reliable service, with opportunities for customer involvement in the review process.

The most recent analyst rating on (AWK) stock is a Buy with a $164.00 price target. To see the full list of analyst forecasts on American Water stock, see the AWK Stock Forecast page.

American Water Expands Board with New Director Appointment

On June 9, 2025, American Water Works Company, Inc. announced the appointment of Raffiq Nathoo as an independent director, expanding the board from eight to nine members. Nathoo, with over 30 years of experience in international financial and capital markets, particularly in the energy, power, and utilities sectors, is expected to enhance the board’s capabilities. His appointment is seen as a strategic move to strengthen the company’s governance and operational oversight, potentially impacting its industry positioning positively.

The most recent analyst rating on (AWK) stock is a Buy with a $164.00 price target. To see the full list of analyst forecasts on American Water stock, see the AWK Stock Forecast page.

Iowa Utilities Commission Approves Rate Increase for American Water

On May 21, 2025, the Iowa Utilities Commission approved a $12.7 million annualized increase in water and wastewater system revenues for Iowa American Water, following a rate case filed on May 1, 2024. This increase is driven by over $157 million in infrastructure investments aimed at upgrading treatment and distribution systems. Interim rates became effective on May 11, 2024, and the new rates will be finalized after the Iowa Utilities Commission reviews the company’s filing. This adjustment reflects Iowa American Water’s commitment to maintaining compliance with state and federal regulations while ensuring reliable services for its customers.

The most recent analyst rating on (AWK) stock is a Buy with a $164.00 price target. To see the full list of analyst forecasts on American Water stock, see the AWK Stock Forecast page.

American Water Announces Acquisition of Nexus Assets

On May 19, 2025, American Water Works Company, Inc. announced an agreement to acquire water and wastewater system assets from Nexus Regulated Utilities, LLC, a subsidiary of Nexus Water Group, Inc., for approximately $315 million. This acquisition, expected to close by August 2026, will expand American Water’s footprint by nearly 47,000 customer connections across eight states, enhancing its growth strategy and operational scale. The transaction requires regulatory approvals and is anticipated to support further growth opportunities and professional development for local employees.

The most recent analyst rating on (AWK) stock is a Buy with a $164.00 price target. To see the full list of analyst forecasts on American Water stock, see the AWK Stock Forecast page.

American Water Seeks Rate Adjustment in Kentucky

On May 14, 2025, American Water Works Company held its 2025 Annual Meeting of Shareholders, where eight directors were elected, executive compensation was approved, and PricewaterhouseCoopers LLP was ratified as the company’s independent public accounting firm. Additionally, Kentucky American Water, a subsidiary of American Water, filed a request with the Kentucky Public Service Commission on May 16, 2025, to adjust water rates, driven by over $212 million in capital investments. This request, aimed at maintaining infrastructure and service quality, could impact customer billing and is subject to regulatory approval.

The most recent analyst rating on (AWK) stock is a Buy with a $164.00 price target. To see the full list of analyst forecasts on American Water stock, see the AWK Stock Forecast page.