American Water Works (AWK)
NYSE:AWK
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American Water
(NYSE:AWK)
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Rating:66Neutral
Price Target:
$147.00
â–²(11.69% Upside)
Action:ReiteratedDate:04/02/26
AWK scores solidly on stable regulated earnings and constructive guidance/rate-case progress, but the overall score is held back primarily by weak free-cash-flow generation and rising leverage/capital needs. Technicals are neutral-to-mildly positive, and valuation appears fair-to-slightly premium with a supportive (but not high) dividend yield.
Positive Factors
Regulatory rate recoveries
Regulatory approvals that align rates with recent capital spending provide durable revenue and cash‑flow support. Authorized returns and added revenue convert past investment into rate base recovery, improving long‑term earnings visibility and funding for ongoing infrastructure programs.
Negative Factors
Persistently negative free cash flow
Consistently negative free cash flow reflects heavy, ongoing capital expenditures to modernize systems. Over time this elevates reliance on external financing, limits financial flexibility, and increases execution risk if capital markets tighten or if regulatory lag delays recovery of invested capital.
Read all positive and negative factors
Positive Factors
Negative Factors
Regulatory rate recoveries
Regulatory approvals that align rates with recent capital spending provide durable revenue and cash‑flow support. Authorized returns and added revenue convert past investment into rate base recovery, improving long‑term earnings visibility and funding for ongoing infrastructure programs.
Read all positive factors
American Water (AWK) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$25.45B
Dividend Yield2.51%
Average Volume (3M)1.90M
Price to Earnings (P/E)22.9
Beta (1Y)-0.27
Revenue Growth12.29%
EPS Growth13.13%
CountryUS
Employees6,700
SectorUtilities
Sector Strength65
IndustryRegulated Water
Share Statistics
EPS (TTM)1.22
Shares Outstanding195,280,120
10 Day Avg. Volume2,121,497
30 Day Avg. Volume1,901,144
Financial Highlights & Ratios
PEG Ratio3.98
Price to Book (P/B)2.35
Price to Sales (P/S)4.95
P/FCF Ratio-23.85
Enterprise Value/Market Cap1.64
Enterprise Value/Revenue8.14
Enterprise Value/Gross Profit18.78
Enterprise Value/Ebitda15.08
Forecast
1Y Price Target
$139.00Price Target Upside5.62% Upside
Rating ConsensusModerate Sell
Number of Analyst Covering3
EPS Forecast (FY)6.1
Revenue Forecast (FY)$5.40B
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 ac...
How the Company Makes Money
American Water primarily makes money through (1) regulated utility revenues and (2) non-regulated (market-based) revenues.
1) Regulated utility revenues (core earnings driver): The majority of the company’s revenue is generated by its state-regul...
American Water Key Performance Indicators (KPIs)
Any
Revenue by Segment
Reveals how much revenue each business unit generates, highlighting the company's core strengths and potential areas for growth or vulnerability.
Reveals how much revenue each business unit generates, highlighting the company's core strengths and potential areas for growth or vulnerability.
Data provided by:
The Fly
The FlyAmerican Water Earnings Call Summary
Earnings Call Date:Feb 18, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 29, 2026
Earnings Call Sentiment Positive
The earnings call presents a largely positive operational and financial picture: American Water delivered solid adjusted EPS growth (8.9% year-over-year), invested heavily (~$3.2B) in infrastructure, maintained affordability targets (residential bills <1% MHI), advanced a robust acquisition pipeline (104,000 connections under agreement) and affirmed 2026 guidance with an 8% EPS growth target. The company also made meaningful financing and balance sheet moves (HOS note repayment, equity forward) and retained investment-grade ratings. Offsetting factors include rising O&M, depreciation and financing costs that increased per-share expense, a leverage level near the company’s stated 60% cap, ongoing large rate cases across multiple states with attendant regulatory and affordability scrutiny, some timing uncertainty around PFAS proceeds, and planned equity issuances. Overall, highlights outweigh lowlights given strong execution, affirmed guidance and strategic M&A progress, though regulatory and cost pressures warrant monitoring.Positive Updates
Strong Adjusted EPS Growth
Adjusted earnings per share of $5.64 for FY2025 versus $5.18 in 2024, representing EPS growth of 8.9% year-over-year.
Negative Updates
Rising Operating Costs
Operating expenses increased: O&M expense higher by $0.42 per share largely due to employee-related costs and higher purchase power pricing; depreciation rose by $0.41 per share and financing costs increased by $0.35 per share, all pressuring near-term margin expansion.
Read all updates
Q4-2025 Updates
Positive
Negative
Strong Adjusted EPS Growth
Adjusted earnings per share of $5.64 for FY2025 versus $5.18 in 2024, representing EPS growth of 8.9% year-over-year.
Read all positive updates
Company Guidance
American Water affirmed 2026 adjusted EPS guidance of $6.02–$6.12 (about 8% growth versus 2025 adjusted EPS of $5.64) and reiterated long‑term EPS and dividend growth targets of 7–9% through 2030 and beyond; the company invested roughly $3.2 billion in 2025, expects long‑term regulated rate base growth of 8–9%, and projects residential water bills to remain under 1% of median household income (forecasted through 2035). Operationally and on M&A, it has ~104,000 customer connections under agreement ($582 million) plus 19 acquisitions for ~$267 million adding ~58,000 connections, with the Nexus close targeted by August 2026. The financing plan calls for $2.5 billion of external equity issuances from 2026–2030 (about $1.0 billion to settle mid‑2026 from an equity forward, with no other equity until 2029), expects to remain below its <60% debt‑to‑capital target (59% at year‑end 2025 net of $98 million cash), maintains S&P A/stable and Moody’s Baa1/stable ratings, repaid a $795 million seller note Feb. 13, and is pursuing multiple rate cases (e.g., PA seeking $169M on $1.2B of investments, NJ seeking $146M on $1.4B, IL seeking a two‑step $134M on $577M, and a Kentucky order authorizing ~$18M with a 9.7% ROE and ~52% equity; CA ROE remains 10.2% through 12/31/2027).American Water Financial Statement Overview
Summary
Income Statement
78
Positive
Balance Sheet
66
Positive
Cash Flow
45
Neutral
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 5.14B | 4.68B | 4.23B | 3.79B | 3.93B |
| Gross Profit | 2.23B | 2.83B | 2.51B | 2.20B | 2.15B |
| EBITDA | 2.77B | 2.67B | 2.36B | 2.00B | 1.91B |
| Net Income | 1.11B | 1.05B | 944.00M | 820.00M | 1.26B |
Balance Sheet | |||||
| Total Assets | 36.52B | 32.83B | 30.30B | 27.79B | 26.07B |
| Cash, Cash Equivalents and Short-Term Investments | 174.00M | 196.00M | 330.00M | 85.00M | 116.00M |
| Total Debt | 15.92B | 14.11B | 12.44B | 12.45B | 11.06B |
| Total Liabilities | 25.69B | 22.50B | 20.50B | 20.09B | 18.78B |
| Stockholders Equity | 10.84B | 10.33B | 9.80B | 7.69B | 7.30B |
Cash Flow | |||||
| Free Cash Flow | -1.07B | -811.00M | -860.00M | -1.31B | -432.00M |
| Operating Cash Flow | 2.06B | 2.04B | 1.87B | 1.11B | 1.44B |
| Investing Cash Flow | -3.31B | -3.38B | -2.81B | -2.13B | -1.54B |
| Financing Cash Flow | 1.25B | 1.11B | 1.19B | 1.00B | -345.00M |
American Water Technical Analysis
Negative
131.61
Price Trends
134.05
Negative
131.71
Negative
134.45
Negative
Market Momentum
-0.75
Positive
42.19
Neutral
19.87
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AWK, the sentiment is Negative. The current price of 131.61 is below the 20-day moving average (MA) of 135.52, below the 50-day MA of 134.05, and below the 200-day MA of 134.45, indicating a bearish trend. The MACD of -0.75 indicates Positive momentum. The RSI at 42.19 is Neutral, neither overbought nor oversold. The STOCH value of 19.87 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for AWK.
American Water Risk Analysis
American Water disclosed 58 risk factors in its most recent earnings report. American Water reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
American Water Peers Comparison
UnderperformOutperform
Sector (66)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
71 Outperform | $10.93B | 17.43 | 9.18% | 3.48% | 21.35% | 20.96% | |
68 Neutral | $24.09B | 10.77 | 20.64% | 2.22% | -10.23% | -26.87% | |
67 Neutral | $940.04M | 26.96 | 9.08% | 2.67% | 6.24% | 3.35% | |
66 Neutral | $25.45B | 22.91 | 10.34% | 2.51% | 12.29% | 13.13% | |
66 Neutral | $17.65B | 18.10 | 5.60% | 3.62% | 6.62% | 11.55% | |
65 Neutral | $2.94B | 21.42 | 13.10% | 2.64% | 10.28% | 13.56% | |
58 Neutral | $2.66B | 20.13 | 7.68% | 2.88% | -2.60% | -33.78% |
* Utilities Sector Average
AWK
American Water
131.61
-11.91
-8.30%
AWR
American States Water
75.92
-2.26
-2.89%
WTRG
Essential Utilities
39.00
0.21
0.53%
CWT
California Water Service
44.96
-4.44
-8.98%
SBS
Companhia De Saneamento
33.85
16.51
95.25%
MSEX
Middlesex Water Company
51.31
-9.57
-15.73%
American Water Corporate Events
Business Operations and StrategyPrivate Placements and Financing
American Water Issues $700 Million Senior Notes for Funding
Positive
Apr 1, 2026
On March 30, 2026, American Water Capital Corp. agreed to sell $700 million of 5.200% Senior Notes due 2036, backed by a long-standing support agreement from American Water Works Company, Inc. The notes, registered under the Securities Act and iss...
Business Operations and StrategyRegulatory Filings and Compliance
American Water Gains Approval for New West Virginia Rates
Positive
Mar 11, 2026
On March 5, 2026, the West Virginia Public Service Commission approved an amended order authorizing new base rates for West Virginia American Water, supporting more than $239 million in water and wastewater system investments made since its last r...
Business Operations and StrategyRegulatory Filings and Compliance
American Water Gains Maryland Approval for Revenue Increase
Positive
Mar 2, 2026
On February 26, 2026, the Maryland Public Service Commission approved a joint settlement granting Maryland American Water, a subsidiary of American Water, a consolidated annualized water revenue increase of about $2 million, its first rate adjustm...
M&A TransactionsShareholder Meetings
American Water Shareholders Approve Stock Issuance for Merger
Positive
Feb 10, 2026
On February 10, 2026, American Water held a special shareholder meeting at which about 82.6% of its outstanding shares were represented, and approximately 99% of votes cast backed the issuance of new common stock to facilitate its merger with Esse...
M&A TransactionsShareholder Meetings
American Water shareholders approve merger with Essential Utilities
Positive
Feb 10, 2026
On February 10, 2026, shareholders of American Water Works Company, Inc. and Essential Utilities, Inc. approved proposals tied to the planned merger of the two regulated water and wastewater utilities. The approvals, based on preliminary voting re...
Business Operations and StrategyRegulatory Filings and Compliance
American Water Seeks Illinois Rate Hike to Fund Upgrades
Neutral
Jan 27, 2026
On January 27, 2026, Illinois American Water filed a request with the Illinois Commerce Commission to raise water and wastewater rates in two steps beginning in January 2027, aiming to generate roughly $134 million in additional annual revenue to ...
Business Operations and StrategyRegulatory Filings and Compliance
American Water Seeks New Jersey Rate Hike for Upgrades
Positive
Jan 16, 2026
On January 16, 2026, New Jersey American Water filed a request with the New Jersey Board of Public Utilities to raise water and wastewater rates, seeking roughly $146 million in additional annual revenue to support more than $1.4 billion in infras...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.